UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

  X Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
                                  Act of 1934

                  For the fiscal year ended: February 28, 2003
                                       or
      Transition Report Pursuant to Section 13 or 15 (d) of the Securities
                              Exchange Act of 1934

                         Commission File Number: 0-7900

                          LIFE PARTNERS HOLDINGS, INC.
                 (Name of small business issuer in its charter)

          Texas                                                74-2962475
(State of incorporation)                                (I.R.S. Employer ID no.)

                                  204 Woodhew
                                Waco, Texas 76712
              (Address of Principal Executive Offices) (Zip Code)

          Issuer's telephone number, including area code: 254-751-7797

        Securities registered pursuant to Section 12(b) of the Act: None
          Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock (par value $0.01 per share)
                                (Title of Class)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for  such shorter period that the Registrant was required to file such reports),
and  (2)  has  been subject to such filing requirements for at least the past 90
days.  Yes  [X]  No  [ ]

Check  if  there  is  no disclosure of delinquent filers pursuant to Item 405 of
Regulation  S-B  contained  herein,  and  will  not be contained, to the best of
Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [ ]

Revenues  of  issuer  for  year  ended  February  28,  2003:  $12,178,433

Aggregate  market  value  of  voting  stock held by non-affiliates as of May 23,
2003:  $  13,468,372

Shares  of  Common  Stock,  $.01  par  value,  outstanding  as  of May 23, 2003:
9,484,785

                      DOCUMENTS INCORPORATED BY REFERENCE

The  Company's  definitive proxy statement in connection with the Annual Meeting
of  Shareholders  to be filed with the Commission pursuant to Regulation 14A, is
incorporated  by  reference  into  Part  III  of  this  report.

<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.

                         2003 Form 10-KSB Annual Report
                                Table of Contents

Item                                                                   Page  No.
                                     Part I

       Special  Note  Regarding  Forward-Looking  Statements                 3

1.     Description  of  Business                                             3

2.     Description  of  Property                                            17

3.     Legal  Proceedings                                                   17

4.     Submission  of  Matters  to  a  Vote  of  Security  Holders          18


                                    Part II

5.     Market for Our Common Stock  and  Related  Shareholder  Matters      18

6.     Management's  Discussion  and  Analysis                              20

7.     Financial  Statements                                                23

8.     Changes  in  and  Disagreements  with  Accountants  on
       Accounting  and  Financial  Disclosures                              23


                                    Part III

9.     Directors, Executive Officers, Promoters and Control Persons;
       Compliance  with  Section  16(a)  of  the  Exchange  Act             23

10.    Executive  Compensation                                              24

11.    Security Ownership of Certain Beneficial Owners and Management
       and  Related  Shareholder  Matters                                   24

12.    Certain  Relationships  and  Related  Transactions                   24

13.    Exhibits  and  Reports  on  Form  8-K                                24

14.    Controls  and  Procedures                                            25

       Signatures                                                           26







                                        2
<PAGE>

                                     PART I

Special  Note  Regarding  Forward-Looking  Statements

     Certain  statements  in  this  annual  report on Form 10-KSB concerning our
business  prospects  or  future  financial  performance;  anticipated  revenues,
expenses, profitability or other financial items, growth in the viatical or life
settlement  markets  or  our  projected  sales  in such markets, developments in
industry  regulations  and  the   application  of   such  regulations,  and  our
strategies,  plans  and  objectives, together with other statements that are not
historical facts, are "forward-looking statements" as that term is defined under
the  Federal securities laws.  All of these forward-looking statements are based
on  information  available to us on the date hereof, and we assume no obligation
to  update  any  such  forward-looking  statements.  Forward-looking  statements
involved  a  number of risks, uncertainties and other factors, which could cause
actual  results  to  differ  materially  from  those  stated in such statements.
Factors  that could cause or contribute to such differences include, but are not
limited  to,  those discussed in this annual report on Form 10-KSB, particularly
in  the  sections  entitled  "Item  1  -  Business - Risk Factors" and "Item 7 -
Management's  Discussion  and  Analysis".  We do not undertake any obligation to
release  publicly  any  revisions  to such forward-looking statements to reflect
events  or  uncertainties  after  the  date  hereof or reflect the occurrence of
unanticipated  events.

Item  1.  Description  of  Business

The  Company

     General.  Life  Partners  Holdings,  Inc.  ("We",  the  "Company"  or "Life
Partners")  is  the  parent  company  of Life Partners, Inc. ("LPI"). LPI is the
oldest  and  one  of  the  largest  viatical  settlement companies in the United
States.  To  supplement  LPI's  viatical  business,   we  have  also  undertaken
development  of  the  market  for  senior life settlement transactions, which we
believe  will  emerge  as  a  market  surpassing  the  viatical  market  .

     Our  Viatical  Settlement  Business.  LPI  was incorporated in 1991 and has
conducted business under the registered service mark "Life Partners" since 1992.
To  date,  our revenues have been principally derived from fees for facilitating
the purchase of viatical settlement contracts. A viatical settlement is the sale
of  a  life  insurance  policy  by  a terminally ill person to another party. By
selling the policy, the insured (a viator) receives an immediate cash payment to
use as he or she wishes. The purchaser takes an ownership interest in the policy
at  a discount to its face value and receives the death benefit under the policy
when  the  viator  dies.

     As a leader in the viatical settlement industry for over a decade, we match
viators with viatical settlement purchasers. We facilitate these transactions by
identifying,  examining  and  purchasing  viatical  settlements as agent for the
purchasers.  LPI locates potential viators through a network of viatical brokers
and  through  referrals  and  Internet  and print media advertising. Brokers are
typically  compensated  based  on  a percentage of the face amount of a viator's
policy,  which  is  paid  upon  the  closing  of a settlement. We have long-term
relationships with most of the country's viatical settlement brokers and believe
that  these brokers adhere to applicable regulatory requirements when conducting
their  business.  In  the  fiscal year ended February 28, 2003, broker referrals
accounted for 77% of our viatical settlement business. Policies presented by two
brokers  constituted  68%  of  all viatical settlements closed during the fiscal
year.

                                        3
<PAGE>

     Purchasers generally come to us through a network of financial planners. We
develop this network through referrals and have long-standing relationships with
most  of  the  financial  planners.  Although  these  financial  planners can be
compensated through fee-based consultations paid by the purchaser, we compensate
most of the financial planners based on the amount invested. The compensation of
financial planners may consist of cash paid on settlement, and in certain cases,
through  a  stock  option plan provided by us based on the volume of a financial
planner's  activity.

     To  purchase a viatical settlement, a prospective purchaser first submits a
purchaser  application,  which  contains   name  and   address  and  affirmative
representations  establishing  the  purchaser  as  a  sophisticated  investor. A
purchaser  will  also  submit an agency agreement and special power of attorney,
which  appoints  us  as  a  limited  agent of the purchaser to act on his or her
behalf  in  purchasing  a  viatical  settlement. Unless specifically waived by a
purchaser,  the  agency  agreement limits our authority to policies issued by an
insurance carrier having an A.M. Best rating of A- or better, to policies beyond
their  contestable  period  (generally  two  years  or  older),  and to insureds
diagnosed  as terminally ill and having a predicted life expectancy of 48 months
or  less.  We  issue  each  financial  planner  a user identification number and
password  which  allows  access  to  our  restricted website containing lists of
available  policies and medical case histories (with the viator's name and other
identifying  information  redacted).  We  also  make available to each financial
planner  standard  disclosures  discussing  the  nature  and  risks  of viatical
settlement  purchases.  A purchaser can then, in consultation with his financial
planner  or  other professionals available to them, select one or more policies,
specify  the  portion  of  the  policy or policies to be purchased (to diversify
their  positions,  purchasers  generally buy fractional interests in one or more
policies  and  not  an  entire  policy),  and  submit electronically or by fax a
reservation form. At the same time, the purchaser mails or wires the acquisition
price  to  the escrow agent and mails or faxes a policy funding agreement to us.
The  policy funding agreement identifies the policy or policies to be purchased,
the  acquisition  price,  the  administrative  services provided, and the escrow
arrangements  for receipt and disbursement of funds. In essence, we act upon the
instructions  of  the  purchasers  as  their  purchasing  agent.

     For  the  protection of the viator's ownership interest and the purchaser's
monetary  interest,  the  viatical settlements are closed through an independent
escrow  agent,  Sterling  Trust  Co.  ("Sterling"),  which   is  a  wholly-owned
subsidiary  of  Matrix  Bancorp,  Inc. (Nasdaq NMS: MTXC). Sterling will close a
purchase when it receives from purchasers executed policy funding agreements and
the acquisition price for a policy, it verifies that the policy is in full force
and  effect  and  that  no  security interest has attached to the policy, and it
receives  from  the  viator  a  transfer of policy ownership acknowledged by the
insurance  company.  Sterling  then pays the viator the offer price (net of fees
and  costs).  After  the closing, we send confirmation of the transaction to the
purchaser  as  well  as  a  copy  of  the  assignment  documents.

     After  closing  the  viatical  settlement,  we  generally hold title to the
policy  as  nominee  for  the purchaser. Responsibility for policy premium costs
passes  to the purchaser, who typically funds the premium costs through deposits
with  Sterling.  A  viator's  personal  information  is protected by regulations
promulgated  by  the  Texas  Department of Insurance. A purchaser will receive a
copy  of the policy and the transfer of ownership (which has the viator named as
the  insured),  but  will  not  receive  viator  contact  information,  which is
available  only  to licensed viatical companies (like Life Partners). We monitor

                                        4
<PAGE>

the  viators' health status and notify Sterling upon their death. We also notify
purchasers  in  instances in which the premium escrow account has been exhausted
so that the purchaser can replenish the account to keep the policy from lapsing.

     We  pioneered  the  foregoing  transaction  design,  which  is used by most
viatical  settlement  companies today. Since our formation, we have participated
in  the  purchase  of  viatical settlements totaling over $388.5 million in face
amount  of  policies.

     The  following  table  shows the number of viatical settlement contracts we
have  transacted,  the  aggregate  face  values  and  purchase  prices  of those
contracts,  and the revenues we derived, for our fiscal years ended February 28,
2001,  February  28,  2002  and  February  28,  2003:
<TABLE>
<CAPTION>
                                            2001        2002        2003
                                            ----        ----        ----
<S>                                        <C>         <C>         <C>
Number of viatical settlements                 125         172         326
Face value of policies (in '000's)          $9,264     $12,499     $43,629
Average revenue per settlement             $27,246     $26,497     $37,357
Net Revenues derived (in '000's)(1)         $1,807     $ 2,241      $6,066
</TABLE>
-------------------
     (1) The revenues  derived are exclusive of referring brokerage and referral
         fees.

     The  Viatical  Market  and Competition. The market for viatical settlements
started  in the early 1990's with the beginning of the AIDS epidemic and rapidly
grew to a market estimated at $1.2 billion in 1999.  In recent years, the market
has  stabilized  due  to  a  number of factors. Factors moderating market growth
include  an  increase  in the life expectancy of persons living with AIDS due to
improved  medical  treatments,  changes  in  insurance policies that provide for
pre-death  cash  benefits and the increase of government regulation with respect
to  viatical  settlements.

     Despite  these  factors,  we  believe  the  viatical settlement market will
continue  to  increase  due  to a number of contravening factors. First, we have
noted  a marked increase in investor demand for viatical settlements. We believe
this  is due, in part, to the volatility of the stock market and lower yields of
interest  bearing  instruments. In addition, while newer medical treatments have
improved  the longevity and quality of life of some, the treatments appear to be
of  limited  efficacy  and  do  not  promise  the  ability  to  cure  or suspend
indefinitely  the effects of the terminal illness AIDS. The decline in the rates
of  AIDS  incidence  appears  to  have  ended  with  the level being essentially
unchanged  from  1999 (41,165), to 2000 (40,766) and to 2001 (41,311), according

*  As  indicated  in  a  1999 report by Conning & Co. based on the face value of
policies  sold.

                                        5
<PAGE>

to  the  HIV/AIDS  Surveillance Report from the U.S. Centers for Disease Control
("CDC")  released  in  September 2002. The CDC reports that the number of deaths
from  AIDS  has declined more slowly since 1998 after a rapid decline in the mid
1990's,  which  may  suggest  that  the  benefits  of newer treatments have been
largely  realized.  In  addition,  a  study released on December 18, 2001 at the
American  Society  for  Microbiology  revealed  that,  out of the 209,000 people
nationwide  under  a physicians' care for HIV in 1999, over half had developed a
resistance  to  at  least one drug used for the treatment of AIDS. The number of
people  living with AIDS increased 8.0% between 1998 and 1999, 7.7% between 1999
and  2000,  and  7.7% between 2000 and 2001, as reported by the CDC. Over 90% of
the  viatical  settlements  we  facilitate are with viators living with AIDS. We
have  responded to the effects of the newer medical treatments by tightening our
policy  analysis  standards  and  reducing  the  offer  prices  to  viators.

     In  response  to  the  development  of  viatical settlements, the insurance
industry  has  responded  with  policy features offering various pre-death, cash
benefits  (sometimes  called  accelerated  death  benefits). While in some cases
accelerated  death  benefits  may  compete  with viatical settlements, we do not
expect  that  the  availability  of  accelerated  death  benefits  to affect the
viatical  market  significantly  at  this  time. The availability of accelerated
death  benefits  is  generally  more  restricted  than viatical settlements. For
example,  policies  often  limit  such  benefits  to  persons  who  have  a life
expectancy  of  less than one year, in contrast to viatical settlements that are
usually  available  to  persons  with  remaining life expectancies of up to four
years.  Viatical  settlements  generally offer viators greater amounts than they
would receive under accelerated death benefit provisions. An insurance company's
willingness  to offer a competitive accelerated death benefit, and the amount of
such  benefit,  may  be affected by imputed policy lapse rates. The availability
and amount of an accelerated death benefit negatively impacts lapse rates, which
could  increase  policy  rates.  The  competition for new policies limits policy
rates  and  may,  indirectly,  limit  the availability and amount of accelerated
death  benefits.  The  viatical  market  has  been  negatively  affected by some
companies using illegal or questionable business practices. In response to these
abuses  and  the  accompanying   adverse  publicity,   government  regulators  -
particularly state insurance regulators - have adopted regulations requiring the
licensing  of viatical brokers and settlement companies, mandated disclosures to
viators  or purchasers or both, and instituting periodic reporting requirements,
and  setting  forth  prohibited business practices. We believe these regulations
have  generally  had  a  positive  effect  on the industry and on our ability to
compete  in  the  viatical marketplace. We are licensed as a viatical company in
the  State  of  Texas  and  information  about us is available through the Texas
Department  of  Insurance.

     The  foregoing  developments  -  improved  AIDS  treatments,  the insurance
industry's  addition  of  pre-death cash benefits, and the increasing government
regulation  -  have  decreased the number of viatical settlement companies, both
those  purchasing  for  their own accounts and those, like us, who act as agents
for  our  purchasers.  Industry  trade  groups  estimate  the number of viatical
companies  actively purchasing for their own account or as agents for purchasers
at  about  12  and the number of viatical brokers at about 25. Most of these are

                                        6
<PAGE>

companies or brokers with small operations and limited capital. While we believe
we  are the largest viatical settlement company (based on face value of policies
settled),  the  viatical  market  is  active  and we will continue to experience
competition  for  new  viators and with respect to the prices we pay viators and
referring  financial  planners,  and  the  prices  we set for the acquisition of
policies.  We  believe the overall market for viatical settlements will continue
at its present level (estimated to be a total of $1.25 billion) and perhaps show
some  increases. In light of our experience in the market, our purchaser network
and  continued  regulatory pressure within the industry (from which we benefit),
we  believe  our  market  share  for   viatical  settlements  will  increase  to
approximately  $50  million in face amount for the fiscal year 2004. In our last
fiscal year, we handled over $43.6 million in face amount, up from $12.5 million
in  2001.

     The  viatical  market has demonstrated sustained growth over the past year.
We  are  seeing  significant  interest in viatical settlements as an alternative
investment following the losses that many investors incurred in the stock market
and  particularly  technology  sector.  Complicating  economic concerns were the
continuing threat of terrorist attacks and the unsettled nature of world events.
We  believe the general economic uncertainty fostered by these circumstances has
led  many  investors  to  seek  alternative investment strategies that diversify
their  portfolios  and  avoid  economically  sensitive  investments.  Viatical
settlements  provide  diversification  and  are  largely  immune  from  economic
downturns.  We  believe  that  interest  from  both individual and institutional
investors  will  continue  to  grow  steadily  throughout  the next fiscal year.

     Our  Senior  Life  Settlement  Business.  As  a  supplement to our viatical
settlement  business,  we  remain  committed  to  the  development  of the newly
emerging  senior life settlement business. A senior life settlement differs from
a viatical settlement in that the insured in a life settlement is not terminally
ill,  is  65 years of age or older, with a life expectancy of ten years or less.
Senior  life  settlements  appeal  to  persons  who purchased life insurance for
income  protection  or  estate planning, but no longer need the insurance due to
growth  in  their  investment  portfolios or other changes in circumstances. The
settlements  also  appeal  to  persons who want to make immediate gifts to their
beneficiaries.  In  these  instances,  the  insured may feel the insurance is no
longer  needed.

     Senior  life settlements offer several benefits. The insured that sells the
policy  receives  a cash settlement for a policy he or she believes is redundant
and  carries  a  benefit  that he or she will never realize personally. A seller
avoids  the  liability  of  future  premiums. Because the policy stays in effect
rather  than  lapsing, the life insurance agent who sold the policy continues to
receive compensation as premiums are paid. The agent may also be the originating
settlement  producer  who  is compensated for the settlement by us. Further, the
agent  may  earn  additional  compensation from the reinvestment of the seller's
cash  settlement  in  other insurance or investment products, such as annuities.

     Since  sellers who participate in a senior life settlement have much longer
life  expectancies  than  viators  (who  are terminally ill), the amount paid to
sellers  is  less  than  in  a  viatical settlement - typically 5% to 15% of the
policy face value. Policies accepted by us for senior life settlements generally
must  have  a  face value of at least $250,000. In determining the price we will
offer  a  senior  life  seller,  we  will  examine  the  policy  terms to ensure
enforceability  and  transferability  and  consider  the type of policy (such as
term,  universal  or  variable  life)  and  future  premium payments. Our policy
analysis  department  will estimate the seller's remaining life expectancy based

                                        7
<PAGE>

on  several  factors including morbidity tables, whether the seller uses tobacco
products,  and  other  health  conditions  such  as  heart disease and diabetes.

     As  in our viatical business, we will use a network of referring insurance,
legal  and  financial professionals to originate potential sellers. Some of this
network  is already in place. We can further develop this network through direct
contact  with  managing  general insurance agents as well as other insurance and
financial  professional  contacts  as well as by word-of-mouth contacts. We will
also  use  print media advertising and our Internet website to attract qualified
policies  for  purchase.

     Since  senior  life  settlements are long-term investments (some lasting 10
years or more), we believe the predominant purchasers of senior life settlements
will  be  institutional  investors seeking long-term, portfolio diversity. These
settlements  represent  an  investment  alternative  since  their yields are not
dependent  upon  the  domestic  and  global  debt  markets  or  interest  rate
fluctuations.

     Because  we  believe  the predominant purchasers of senior life settlements
will  be  institutional  investors, we have sought to develop funding mechanisms
appropriate  for institutional investors. We believe the most likely mechanism -
or  purchasing  platform  -  will  be a securitization of senior life settlement
pools  sold  through  investment  banks  as bonds to institutional investors. To
interact  with  the  investment  banks  and  institutional investors, we have an
executive  experienced  in  the  capital  markets  who works directly with these
investors.

     We  believe the market for senior life settlements shows great promise, but
its  development  depends  on  the  creation  of  reliable  funding  mechanisms.
Potential  settlors  and  policy  originators will not view the market as viable
without  a  continuing  and  reliable  funding  mechanism.  The  completion of a
securitized  purchasing  platform  has taken longer than expected.  We believe a
primary  reason  for  the  delay  is  the lack of any precedent for securitizing
senior  life settlements.  The design and establishment of a suitable purchasing
platform  has  required  extensive  review  and  consideration by the investment
bankers  and  institutions with whom we have worked.  Another reason is the need
to establish a pool of policies that a bond rating agency can examine before the
pool  is securitized.  Establishing a pool requires mezzanine financing which we

                                        8
<PAGE>

would  use  to  acquire  policies.  We  are  exploring sources for the mezzanine
financing.

     In addition to our efforts to develop a securitized purchasing platform, we
have  developed  a  non-securitized  vehicle  for  institutional  clients  and
accredited  investors.  This  vehicle  offers  participants  a  preferred return
generated  from a pool of senior life settlements. Through this vehicle, we hope
to  acquire  policies  having a face value of $10 to $50 million. The vehicle is
scheduled  to  close  by  December  31,  2003,  although we may begin purchasing
policies  earlier.

     Because our securitized purchasing platform is not yet operational, we have
not  aggressively  sought  to expand our policy origination network, although we
have  accepted  and  continue to accept policy presentations averaging $10 to 12
million  in  face  value  per  month  which we process for our clients. Once the
platform is fully operational, we intend to expand the referral network and seek
out  qualified  policies.  Our ability to reach our goal of $1.0 billion dollars
per  quarter  of  face value of policies is dependent upon the ratio of policies
presented  to  those  which  pass  our  policy  analysis standards, the ratio of
sellers  that  accept  our  offer  price  and  the  ratio of policies ultimately
accepted  for  purchase  by  the  institution.

     We  intend to use procedures to facilitate senior life settlements that are
substantially similar to the procedures we use in viatical settlements. Sterling
Trust will act as escrow agent and will confirm receipt of the acquisition funds
and  all  necessary agreements and authorizations, and verify that the policy is
fully  paid  and  that  no  security  interest has attached. When Sterling Trust
completes these tasks, it will distribute funds to the seller and to us and send
a  purchase confirmation to the purchaser. Unlike with viatical settlements, the
purchasing  institutions  will  generally  hold  title  to  the policies and may
perform  all  post-sale  services, such as the payment of premiums and mortality
tracking  or  employ  us  or  some  other qualified company to perform post-sale
services.

     We  are  hopeful  that  we can develop a funding mechanism for securitizing
pools  of  senior  life  settlements.  Such a mechanism would provide investment
capital for exploiting a market that we believe shows exceptional promise. As we
work on a securitizaiton platform, we will also pursue non-securitized platforms
such  as  the  institutional  vehicle we are currently placing. While we presume
that  non-securitized  platforms  will  not  attract the investment capital that
securitized platforms might attract, the non-securitized platforms could attract
$10  to  $50  million  of  annual  investment capital. Such capital would aid in
developing  the  senior life market. Should this occur, we stand in an excellent
position  to  capitalize  on the use of senior life settlements in this way.

                                        9
<PAGE>

     Senior  Life Market and Competition. The market for senior life settlements
is  new,  first  appearing  in  1997.  Despite  its  newness,  Conning & Co., an
independent industry analyst, has estimated the total face amount of senior life
settlements  purchased  in 1998 at $0.5 billion and the potential market of over
$100  billion  in  face  value  of life insurance policies. Even if only a small
portion  of  this  total  of  potential policies engage in life settlements, the
market  is  still  large.  The attraction for senior life brokers and settlement
companies  lies  in  the potential size of the market. The market is expected to
grow  given  predicted  increases  in  the  aging  population  and their greater
economic  wealth.

     Most  of  the  senior  life settlement purchases are presently conducted by
fewer  than  ten companies. The senior life settlement market is a new market in
which  we  and  a  handful of other companies are pioneers. Because of the large
capital  requirement  necessary  to  obtain a substantial pool of policies, only
institutions  and  accredited investors will be purchasing such policies. As the
only  publicly  held  company  in this industry, we believe we hold an excellent
market  position  for  attracting  such investors and we have the infrastrature,
experience  and  financial  resources  to provide such investors with steady and
reliable  origination  services  in purchasing such policies. Although there has
been  significant  interest  in  senior  life  settlements from institutions and
accredited  investors,  we  will  depend  upon  these investors or other outside
sources of capital for growth in this market. If we are unable to obtain outside
sources of capital, it could significantly affect our ability to compete in this
market.

Industry  Regulation  and  Taxation

     General.  When  the viatical market first arose, it was sparsely regulated.
Due  in part to abuses within the industry, which were well-publicized, both the
federal  government  and  various  states  moved  to  regulate the market in the
mid-1990's.  The  regulations  generally  took  two  forms.  One sought to apply
consumer  protection-type  regulations  to  the  market.  This  application  was
designed  to  protect  both  viators  and  purchasers.  Another  sought to apply
securities  regulations to the market, which was designed to protect purchasers.
Various states have also used their insurance regulations to attack instances of
insurance  fraud  within  the  industry.

     Consumer  Protection  Licensing.  The  consumer protection-type regulations
arose  largely  from the draft of a model law and regulations promulgated by the
National  Association of Insurance Commissioners (NAIC). At least 35 states have
now  adopted  some  version  of  this  model  law  or another form of regulation
governing  viatical  settlement  companies  in  some  way.  These laws generally
require  the licensing of viatical providers and brokers, require the filing and
approval  of  viatical settlement agreements and disclosure statements, describe
the  content  of  disclosures  that  must be made to potential viators, describe
various  periodic  reporting  requirements for viatical settlement companies and
prohibit  certain  business  practices  deemed  to  be  abusive.

     Licensing  in  Texas. We are licensed by the Texas Department of Insurance.
Under  the  Texas  requirements, we must file our transaction documents with the
state for approval, make certain disclosures to viators, offer a 15 day right of
rescission  to  the  viator,  file  certain  annual  reports with the state, and

                                       10
<PAGE>

prohibits  unfair  business  practices. Because all of our transactions occur in
Texas,  the  Department  of Insurance has jurisdiction to investigate complaints
from  any viator, irrespective of the state in which that viator lives.

     In  1999, Texas became the first state to regulate life settlements as well
as  viatical  settlements.  The  Texas regulatory scheme for life settlements is
identical  to  the  regulatory  scheme  applicable  to  viatical settlements. It
requires  licensing  of  providers  and  brokers,  implements  various reporting
requirements  and  mandates required disclosures. Life Partners is licensed with
the  State  of  Texas  as  a  life  settlement  company.

     Securities  Regulations.  Despite  the  apparent  success  of  consumer
protection-type  laws  in  regulating the viatical industry, some states and the
Securities  and Exchange Commission have attempted to treat viatical settlements
as  securities  under  federal  or  state  securities  laws.  Whether  viatical
settlements will be regulated as securities and the effect of such regulation on
the  market  is  uncertain. Such regulation will not significantly affect senior
life  settlements  involving  institutional  purchasers,  either  because  of
exemptions  from registration available in institutional transactions or because
the  settlements  collateralized bond transactions that are registered or exempt
from  registration.

     At  least  14  states  have  either amended their securities laws to define
viatical  settlements  as  securities  or asserted that viatical settlements are
securities and announced their intention to regulate the offer and sale viatical
settlements.  To  avoid  these  developments,  we  do  not  perform services for
investors  in  these  states,  unless  it  is  for  an  entity that has properly
registered  the  viatical  settlements as securities or complies with a state or
federal exemption to that state's securities laws.  Federal and state securities
laws  provide  private remedies, which permit individuals to sue under such laws
if  they  can  establish  that the settlements are securities.  We have recently
encountered  one such action.  Having successfully defended an action by the SEC
alleging  the  settlements  were  securities, we believe that we will prevail in
suits  alleging  the sale of "securities", but can not give assurance that state
regulators  or  private  individuals will not file these types of actions in the
future.  [See  Item  3.  Legal  Proceedings.]

     We believe that a combination of consumer protection-type laws and existing
insurance  regulations  provide  an  appropriate framework for regulation of the
industry.  The  widespread  application of securities laws would, as a practical
matter,  prevent  us  and  other  viatical  settlement  companies from marketing
settlements with little or no benefit to purchasers.  Each of our purchasers has
represented  themselves to be sophisticated individuals who have little need for
the  protections  afforded  by the securities laws.  At this point, the possible

                                       11
<PAGE>

application  of  such  laws  has  not  had  an  adverse,  material effect on our
business,  but  we  can  not  give  assurance  that  our  business  would not be
materially  and  adversely  impacted  by  a  securities-based  action.

     Insurance Regulation. As a senior life settlement company and as a viatical
settlement  company,  we  facilitate the transfer of ownership in life insurance
policies,  but  do  not  participate  in  the  issuance  of policies. We are not
required to be licensed as an insurance company or an insurance professional. We
do, however, deal with insurance companies and professionals in our business and
are indirectly affected by the regulations covering them. The insurance industry
is  highly  regulated, and these regulations affect us in numerous ways. We must
understand  the regulations as they apply to policy terms and provisions and the
entitlement  to,  and  collectibility  of,  policy  benefits.  We  rely upon the
protections  against fraudulent conduct that these regulations offer and we rely
upon  the  licensing  of  companies  and  individuals  with whom we do business.

     Taxation.  In  1996,  Congress  passed the Health Insurance Portability and
Accountability  Act.  This  act  exempts  from  taxation  proceeds received in a
viatical  settlement  paid  to  terminally  ill  viators  (those  having  a life
expectancy  of  24  months  or  less) and chronically ill viators (those who are
incapable  of  at least two daily-living activities, such as eating and bathing,
and  require  supervision).  The  tax  exemption  applies  only  if the viatical
settlement  company  is licensed in the state in which the viator resides, or if
the  viator  resides in a state that does not license viatical companies, if the
viatical  company  can  certify  that it complies with the model act provisions.
Because  we  are  licensed in Texas, we believe that, under 1996 act, qualifying
viators will not be subject to federal income tax from viatical settlements that
we  facilitate. Since most states follow the Federal income tax definitions, the
receipt of settlement proceeds is generally exempt for state income tax purposes
also.

     The  act  does  not  exempt the receipt of senior life settlement proceeds.
Senior  life  settlement proceeds would typically be taxed as ordinary income to
the extent that the proceeds exceed the premiums paid for the insurance  policy.

Employees

     As  of  February  28,  2003,  we  had 32 direct employees, none of whom are
represented  by  a  labor  union,  as  well  as  over 1,000 licensees who act as
independent  contractors  and  refer  clients to us for the purchase of viatical
settlements.  We  continuously  review benefits and other matters of interest to
our  employees  and  consider  our  employee  relations  to  be  satisfactory.

More  about  Life  Partners

     The  Company  is the successor to IGE, Inc., a publicly held, Massachusetts
corporation that was formed in 1971, but had been dormant and without operations
since 1985.  On January 21, 2000, IGE, Inc. acquired LPI in a share exchange and
its  name  was  then  changed  to  Life  Partners Holdings, Inc. The Company was
redomesticated  to Texas on February 19, 2003.  Before January 21, 2000, we were
a privately held corporation.  Our executive offices are located at 204 Woodhew,
Waco,  Texas  76712  and our telephone number is 254-751-7797.  Our websites are
www.lifepartnersinc.com  and  www.lpi-investments.com.

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<PAGE>


                                  RISK FACTORS

     In  addition  to other information in this annual report on Form 10-KSB and
in  the  documents we are incorporating by reference, the following risk factors
should  be  carefully  considered in evaluating us and our business because such
factors  significantly  affect  or  could  significantly  affect  our  business,
operating  results  or  financial  condition.  This annual report on Form 10-KSB
contains  forward-looking  statements  that  have  been  made  pursuant  to  the
provisions  of  the  Private  Securities  Litigation Reform Act of 1995.  Actual
results  could  differ  materially  from  those projected in the forward-looking
statements as a result of the risk factors set forth below and elsewhere in this
annual  report  on  Form  10-KSB.

We  Are  Operating  in  Markets  that  May  Change  Dramatically

     We  are  operating in the viatical and senior life settlement markets.  The
viatical  settlement  market  is  just  over a decade old.  While the market saw
tremendous  growth  in  its initial years, the market growth in recent years has
moderated  somewhat.  The  senior  life settlement market is less than six years
old.  How  and to what extent it will develop is uncertain.  While the potential
market  is  estimated  at  over  $100  billion  in  face  amount, our ability to
originate,  underwrite and place senior life settlements has yet to be tested in
large  numbers.  We  are  a  pioneer  in  this  developing market and, if we are
successful in establishing a purchasing platform which is steady and reliable by
the  capital markets, we believe we benefit tremendously from our current market
position.  However,  the  development  of the senior life settlement market will
depend  heavily  upon  the  entry  of  institutional purchasers.  Whether we can
attract  institutional  purchasers  will depend on our ability to convince these
purchasers  that  we  can  originate  sufficient numbers of sellers and that our
policy  analysis  and  pricing  practices  are  sound.

     While  we are among the most experienced and largest companies within these
markets,  our  prospects  must be considered in light of the risks, expenses and
difficulties  encountered  by  those  attempting  to operate in rapidly evolving
markets.  We  cannot  assure  you  that  we will be successful in addressing the
risks we face.  The failure to do so could have a material adverse effect on our
business,  financial  condition  and  results  of  future  operations.

Our  Operating Results in One or More Future Periods Are Likely to Fluctuate and
May  Fail  to  Meet  Expectations.

     Our  operating  results  in the viatical market have fluctuated in the past
and  may fluctuate significantly in the future depending on purchaser demand for
viatical  settlements.  Our  operating  results  in  the  senior life settlement
market  may fluctuate significantly depending on our ability to develop this new
market.  Because  of  these or other factors, our operating results may, in some
future  period, fall below market expectations.  In such event, the market price
of  our securities might fall.  Moreover, fluctuations in our viatical operating
results  may  also  result  in volatility in the market price of our securities.

                                       13
<PAGE>

Our  Success  Depends  on Maintaining Relationships Within Our Referral Networks

     In  the  viatical market, we rely primarily upon brokers to refer potential
viators to us and upon financial planners, known as licensees, to refer viatical
purchasers  to  us.  These  relationships are essential to our operations and we
must  maintain  these  relationships  to  be  successful.  We  do not have fixed
contractual  arrangements  with  the  brokers or financial planners and they are
free  to  do  business  with  our competitors. In addition, the pool of viatical
brokers and referring financial planners is relatively small, which can increase
our  reliance  on  our  existing  relationships. During the past fiscal year, we
relied  on 2 brokers for 68% of the policies that were closed by us. The loss of
either  of such broker could have a material effect on our financial operations.
We  have  attempted  to  ameliorate  this risk by increasing our advertising and
market  presence  in  order  to  attract viators to us directly. During the last
fiscal  year,  23%  of  all  policies  closed  were  presented to us directly by
viators.  This  amount was equal to our second most active broker. However, many
viators are more comfortable having their policies presented through brokers and
the  extent  to  which  we  may  be able to attract viators directly is unknown.

     In  the   senior  life  market,   we  will   rely  primarily  on  insurance
professionals,  known  as  producers, to refer potential sellers to us. We would
typically  compensate  these professional upon closing. Our ability to build and
maintain these relationships will depend upon our closing rates and the level of
compensation  we pay to the referring professional. The compensation paid to the
referring  professional  will  affect  the  offer  price  to  the seller and the
compensation  we  receive. We must balance these interests successfully to build
our  referring  network  and  attain greater profitability. Although we have not
purchased  any  senior  life settlement policies to date, we have maintained our
relationship  with  our  producer   network  and  do  not  believe   that  these
relationships  have  suffered  any  significant  damage  due  to  the  delay  in
initiating  purchases.

Our  Success  in  the Senior Life Settlement Market Will Depend on Institutional
Sources  of  Capital

     Since  1997, we have expanded our business plans to include the senior life
market  by  soliciting  senior  life  sellers,  creating  a senior life referral
network,  and  establishing  a  division dedicated exclusively to attracting and
interacting with large financial institutions.  To date, we have not consummated
any  of  these  senior  life  settlements  through  this  mechanism.

     Our  investment bankers maintain a high degree of confidence that a capital
markets  vehicle  to accommodate the financing of senior life settlements can be
structured  and placed with institutional investors, provided a critical mass of
acceptable  policies  is  purchased.  We  have not yet purchased such a pool for
submission  to  a  rating agency, but continue to work on financing options that
will  permit  us  to  acquire  such  a  pool and establish an ongoing purchasing
platform for a bond that is securitized by senior life settlements. Our approach
depends  substantially  upon our ability to develop a suitable purchase platform
and  secure  one or more underwriters to market the bonds and the development of

                                       14
<PAGE>

an  institutional  market  for  the  bonds.  While  we  have conducted extensive
discussions  with  several  investment firms and bond rating agencies, we do not
have a firm commitment for a bond offering to date. To our knowledge, no one has
successfully  conducted  a  bond  offering securitizing senior life settlements.
While  we  believe  the senior life settlements are well suited for this use and
have devoted substantial resources to pursuit of this approach, we cannot assure
you  that  an  underwriter  will commit to the bond issue or that the bond issue
will  create  sufficient  institutional  interest.

We  Must  Develop  Our  Senior  Life  Referral  Network

     An  impediment  to our expansion in the senior life settlement market could
be  the  difficulty  in  identifying  a large volume of potential sellers. These
sellers  are typically affluent persons over the age of 70 and not terminally or
chronically  ill. The target market is relatively narrow and advertising methods
such  as  direct  mailings  or  print  media  advertising  are  not likely to be
cost-effective.  We  believe  the  best  way  to  reach this market is generally
through  life  insurance   professionals  and,  to  a  lesser   extent,  through
professionals  engaged  in  estate  planning, such as attorneys, accountants and
financial  planners. Our business plan focuses on insurance professionals and we
intend  to  rapidly  expand  our referring network of insurance professionals to
build  our  senior  life  market. When we obtain a purchase platform to fund the
senior life settlements, we will expand our network through direct solicitation,
calls  to managing general insurance agents, and by word-of-mouth contacts. To a
lesser  extent,  we  will  also   use  advertising  in  estate   planning  trade
publications  and  our  Internet  website. This is a new market and building our
referral  network  will depend on our ability to educate insurance professionals
about  the  benefits  of senior life settlements to potential sellers and to the
professionals  themselves.    While  we  believe  we  have  been  successful  in
publicizing  the benefits of viatical settlements, we cannot assure you that our
past  successes  will  carry  over into this new market. Our business, financial
condition  and  results  of operations could be materially adversely affected to
the  extent  we  fail  to  expand  the  referral  network.

We  Depend  on Growth in both the Viatical Settlement Market and the Senior Life
Settlement  Market

     We  believe  the  viatical market is growing and will provide a stable base
for our operations. Large-scale growth, however, will likely depend on growth in
the  senior life settlement market. The senior life market is new and its growth
uncertain.  The senior life market may fail to grow due to a variety of factors,
including:

     -  the  inability  to  locate  sufficient  numbers  of senior life sellers;

     -  the  inability  to  convince potential sellers of the benefits of senior
        life settlements;

     -  the  inability  to  attract  institutional  purchasers;

     -  competition  from life insurance companies offering comparable products;

                                       15
<PAGE>

     -  the  occurrence  of  illegal  or abusive business practices resulting in
        negative  publicity  about  the  market;  and

     -  the  adoption  of  burdensome  governmental  regulation.

     In  addition,  the  senior  life  market  may  evolve  in  ways we have not
anticipated  and  we  may  be  unable  to  respond in a timely or cost-effective
manner.  If the senior life market fails to grow, or fails to grow as quickly as
we have anticipated, our business, financial condition and results of operations
would  be materially adversely affected as it relates to our large scale growth.

Our  Purchasers  Depend on Our Abilities to Predict Life Expectancies; If We Are
Not  Accurate,  We  Will  Lose  Purchasers;  We  Must  Purchase In Large Numbers

     A  purchaser's  investment return from a viatical or senior life settlement
depends  primarily  on  the demise of the insured. We price settlements based on
the  anticipated  life  expectancy  of an insured. For viatical settlement, life
expectancies  are  estimated  based  on  a  medical analysis of the insured. For
senior  life  settlements,  life  expectancies  are  estimated  from medical and
actuarial  data  based  on  the  historical  experiences  of  similarly situated
persons.  The  data  is  necessarily  based  on averages involving mortality and
morbidity  statistics and the laws of large numbers. It is impossible to predict
any  one insured's life expectancy exactly. To mitigate the risk that an insured
will  outlive  his  or  her  predicted  life  expectancy,  viatical  settlement
purchasers  must  be  able  to bear a non-liquid investment for an indeterminate
period  of  time.  Additionally, purchasers of senior life settlements must have
the  potential  to buy such policies in large numbers in order to mitigate risk.

     If  we underestimate the average life expectancies, our purchasers will not
realize the returns they seek and will invest their funds elsewhere. Our ability
to  accurately  predict  life  expectancies  is affected by a number of factors,
including:

     -  the accuracy of our life expectancy estimations, which must sufficiently
        account  for  factors  including  an  insured's  age, medical condition,
        life  habits (such  as  smoking),  and  geographic  location;

     -  our  ability  to  anticipate  and adjust for trends, such as advances in
          medical  treatments,  that  affect  life  expectancy  data;  and

     -  our ability  to balance  competing interests  when pricing  settlements,
        such as  the  amounts  paid  to viators  or  senior  life  sellers,  the
        acquisition costs  paid  by  purchasers,  and  the  compensation paid to
        ourselves and our referral networks.

     To  foster  the  integrity of our pricing systems, we use both in-house and
outside  experts,  including  a medical doctor and published actuarial data.  We
cannot  assure  you  that, despite our experience in settlement pricing, we will
not  err  in  underestimating  average life expectancies.  If we do so, we could
lose  purchasers and the loss of purchasers could have a material adverse effect
on  our  business,  financial  condition  and  results  of  operations.

Government  Regulation  Could  Negatively  Impact  Our  Business

     We  are licensed in the State of Texas as a viatical settlement company and
as  a  senior life settlement company.  The Texas licensing laws and regulations

                                       16
<PAGE>

are  based  in  part  on a model law and regulations promulgated by the National
Association  of  Insurance  Commissioners.  At  least  35  other states have now
adopted  some  version of this model law or another form of regulation governing
viatical  settlement  companies  in  some  way. These laws generally require the
licensing  of viatical providers and brokers, require the filing and approval of
viatical  settlement  agreements  and  disclosure  statements, and describe  the
content of disclosures that must be made to potential viators, describes various
periodic  reporting requirements for viatical settlement companies and prohibits
certain  business  practices  deemed  to  be  abusive.

     The Federal Securities and Exchange Commission and certain states have also
attempted  to regulate the industry through the application of federal and state
securities  laws.  In  a  suit filed against us, the SEC's attempts to apply the
securities  laws  were rebuffed by the U.S. Court of Appeals for the District of
Columbia,  which  ruled  that  our  transactions  are  not  securities under the
federal  securities  laws.  Based  on  this ruling, the SEC has discontinued any
further attempts to apply the federal securities laws to viatical settlements as
transacted  by  us.  The Court of Appeals decision was based on federal law and,
while  persuasive  authority, is not binding upon the states. At least 11 states
have  either amended their state statutes to include viatical settlements in the
definition  of  a  "security"  or indicated that they may apply their securities
laws  to  include  viatical  settlements.  In  addition,  both federal and state
securities  laws provide private remedies, which permit individuals to sue under
such  laws if they can establish that the settlements are securities. To date we
have  encountered  only  one  such action. To our knowledge, no state or private
individual  has  yet  attempted  to  apply  its  securities  laws to senior life
settlements, but such application is possible and could occur in the future. See
Item  3.  Legal  Proceedings.

     While  we  welcome  reasonable  regulation  of the viatical and senior life
markets and believe that such regulation will benefit these markets, attempts to
regulate  these  markets  through  application of their securities laws - either
through  actions by state agencies or private individuals - may adversely affect
the  markets.  We  cannot  assure  you  that  we  will  not encounter regulatory
difficulties  in  the future, some of which could have a material adverse effect
on  our  business.  In addition, government regulation could affect our referral
networks  or  settlement purchasers, which could in turn have a material adverse
effect  on  our  business.

Our  Chairman  and  Chief  Executive Officer Beneficially Owns 54% of Our Common
Stock  and,  as  a  Result,  Can Exercise Significant Influence over Our Company

     Mr.  Brian  D.  Pardo, our Chairman and Chief Executive Officer, is defined
under SEC regulations as the beneficial owner of approximately 54% of our common
stock  and  exercises  voting  power  by  proxy from The Pardo Family Trust over
55.64%  of the common stock (since we cannot vote the 515,215 shares held in our
treasury).  He  will  be  able to control most matters requiring approval by our
shareholders,  including  the  election of directors and approval of significant
corporate transactions. This concentration of ownership may also have the effect
of  delaying  or  preventing a change in control of Life Partners, which in turn
could  have a material adverse effect on the market price of our common stock or
prevent  our  shareholders  from  realizing  a premium over the market price for
their  shares  of  common  stock.

                                       17
<PAGE>

Our  Stock  Is  Thinly  Traded  and  the  Stock  Price  May  Be  Volatile

     Our  common  stock  is  traded on the Nasdaq OTC Bulletin Board, which is a
quotation  service  facilitating  trades  in over-the-counter equity securities.
The  OTC  Bulletin  Board  is  generally the market for any security that is not
listed  or traded on Nasdaq or a national securities exchange.  The OTC Bulletin
Board  does  not provide the same qualitative standards available with Nasdaq or
the national securities exchanges, order execution is manually processed, and as
a  result  the  trading  and  pricing of these securities is not as efficient as
Nasdaq or the national securities exchanges.  Our share price during the 90 days
ended  May  23,  2003,  has  averaged about $3.16  per share, giving us a market
capitalization  of  approximately $30 million.  Our total share volume for April
2003  was  approximately  53,000  shares.  The  trading volumes are thin and the
market  presently  offers  shareholders  little  or  no  liquidity.

     Our share prices may be volatile due to actual or anticipated variations in
our  quarterly  operating  results, positive or negative developments within the
industry  or  the  general  economy,  and  positive  or  negative  announcements
regarding  material  developments in our business. We cannot assure you that the
market  for  our shares will be sufficient to permit you to sell our shares when
you  want  at  the  prices  you  want.

Item  2.  Description  of  Property

     Our  corporate  offices  are located at 204 Woodhew in Waco, Texas.  We own
1.068  acres  at  this  location and our offices occupy the entire 12,012 square
foot  office  building,  which  was  built  on  the  lot  in  1986.

Item  3.  Legal  Proceedings

     On September 28, 2000, LPI was named as defendant in a suit entitled Bobbie
J.  Griffitts v. Life Partners, Inc., Cause No. 2000-3235-1 in the 19th Judicial
District  Court  of  McLennan  County  claiming  the  Company violated the Texas
Securities Act by not complying with the registration requirements of the Act in
connection  with  viatical  settlement contracts it arranged.  On July 31, 2001,
the  Court ruled that LPI's viatical settlement transactions were not securities
under  Texas  law  and  that  LPI is not required to register them as securities
prior to sale. In making its  ruling, the Court awarded summary judgment against
the  Plaintiff  in  this  action  dismissing  the  case entirely.  Plaintiff has
appealed  this decision to the Court of Appeals for the Tenth District of Texas,
Case  No. 10-01-271-CV. Briefs have been filed by both parties and oral argument
has  been  held before the Court. The case has been submitted for a decision and
we  are awaiting that decision.  Management is committed to vigorously defending
this  action  and  believes  the Appellate Court will uphold the decision of the
District  Court  in  dismissing  the case.  However, it should be noted that the
outcome of any litigation is unpredictable and we cannot assure you that we will
ultimately  prevail.

     LPI  is  the defendant in an action styled State of Texas v. Life Partners,
Inc.,  filed  in  the  250th  District  Court  of Travis County, Texas, Case No.

                                       18
<PAGE>

GV100564.  Plaintiff  alleges  that  LPI  failed  to  disclose  to purchasers of
viatical  settlements  before  1997  that  the purchasers could incur additional
carrying  costs  in  the  form of premium payments if viators lived beyond their
projected  life  expectancies.  Plaintiff claims that the nondisclosure violates
the  Texas  Deceptive  Trade  Practices Act (the "DTPA") and seeks an injunction
against  future  violations,  civil  penalties,  and restitution to the affected
individuals. We have met with Plaintiff to discuss resolution of the matter, but
the  results  of  such  meetings  have  been  inconclusive.  To  date,  only one
deposition  has  been  taken  and  we  have cooperated on an informal basis with
requests  for  information.  There has been no other activity in this matter. We
believe  that  we  have not violated the DTPA and that the applicable statute of
limitations  would  preclude most of possible claims. As of February 28, 2003,we
had  $300,000  accrued  for  the  defense  and  settlement  of  this litigation.

     On September 20, 2001, we received notice from the Internal Revenue Service
for  a  proposed  tax  adjustment  to  LPI's  taxable income for the years ended
September  30,  1993,  1994  and  1995.  The  proposed  tax deficiencies totaled
$1,775,624  plus  proposed  penalties  totaling $351,125. Interest and penalties
could  be  added  to  any  portion  of  this  assessment that is upheld. We have
challenged  this  assessment  in  a petition filed on November 29, 2001 with the
United Stated Tax Court entitled Life Partners, Inc. v. Commissioner of Internal
Revenue,  Case  No.  13516-01.  Our  legal  counsel  and  we are assessing LPI's
liability, if any, in connections with this proposed assessment. We believe that
LPI has substantial support for its position and that the ultimate liability, if
any,  will  be substantially less that the proposed assessment. We have not been
able to determine the amount, if any, of liability that should be accrued on our
books  in connection with this proposed tax adjustment, therefore no accrual has
been  recorded  as  of  February  28,  2003.

     We  are  also  subject  to  legal  proceedings  in  the  ordinary course of
business,  none  of  which,  either individually or collectively, we believe are
material  to  our  business  operations,  financial  condition,  or  results  of
operations.

Item  4.  Submission  of  Matters  to  a  Vote  of  Security  Holders

     No  matter  was  submitted  during  the  fourth  quarter of the fiscal year
covered  by  this  Annual  Report  to  a vote of the Company's security holders.

                                    PART II

Item  5.  Market  for  Our  Common  Stock  and  Related  Shareholder  Matters

     Market  Information.  On  May  23,  2003,  there   were  approximately  131
shareholders  of  record  of our Common Stock.  Most of our common stock is held
beneficially  by  broker/dealers.  We  believe  that there are approximately 483
beneficial  owners of shares of our common stock who hold in street name through
brokers.

     The  following  table  sets  forth  the high and low closing bid prices per
share  of  our  common  stock for each full quarterly period during the two most
recent  fiscal  years,  as reported by the Nasdaq OTC Bulletin Board. Bid prices
for  the  Nasdaq  OTC Bulletin Board reflect inter-dealer prices, do not include
retail  mark-ups,  mark-downs  and  commissions,  and do not necessarily reflect
actual  transactions.

                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                                         Cash
                                                    High       Low     Dividends
                                                    ----       ---     ---------
     Year  Ended  2/28/02
<S>                                                <C>        <C>         <C>
       First  Quarter                              $11.00     $3.20          --
       Second Quarter                              $14.00     $7.25          --
       Third Quarter                               $11.00     $4.40          --
       Fourth Quarter                               $6.85     $3.40       $.025

     Year  Ended  2/28/03
       First Quarter                                $8.00     $4.00       $.025
       Second Quarter                               $4.60     $1.80       $.025
       Third Quarter                                $3.00     $1.65       $.025
       Fourth Quarter                               $3.40     $2.25       $.035
</TABLE>

     On  May  23,  2003, the last reported sale price of our common stock on the
Nasdaq  OTC  Bulletin Board was $3.40 per share.  During the year ended February
28,  2003,  we  made  open  market  purchases  of  144,891 shares for $632,723.

     We  have  announced  our  intention  to  qualify  for listing on the Nasdaq
SmallCap  Market.   Qualification   involves  meeting  certain  minimum  listing
standards,  which include qualitative listing standards and minimum share price,
income  and  asset  requirements.  To  qualify,  we  must increase the number of
independent  directors and the average share price must trade at $4 or above for
90  consecutive  days.

     Until  and  unless  we  qualify for listing on the SmallCap Market, we will
remain  on  the  Nasdaq  OTC Bulletin Board. The OTCBB plans to convert to a new
exchange  on  January  1,  2004.  The new exchange will be known as the Bulletin
Board  Exchange(SM)  or  BBX.  The  BBX  will  be  a  listed  market  place with
qualitative  listing standards, but with no minimum share price, income or asset
requirements.  The  BBX  will  have  an electronic trading system to allow order
negotiation  and automatic execution. If and when, the BBX is implemented, there
is  no  guarantee  that  we  will  qualify  to  be  listed  on  this  exchange.

     Dividends.  On  February  8,  2003,   the  Board  of  Directors  authorized
management  to  declare  a 3 cent per share cash dividend per quarter if, in the
opinion  of  management,  such  a declaration will not adversely affect our cash
position. The Board further authorized management to declare, in addition to the
ordinary 3 cent per share cash dividend, an additional special divided of 1 cent

                                       20
<PAGE>

per  share  "Christmas  Bonus"  dividend for the 3rd quarter for shareholders of
record  as  of  November  30,  2003.

Item  6.  Management's  Discussion  and  Analysis

     Special  Note:  Certain  statements  set  forth  below  under  this caption
constitute  "forward-looking  statements"  within the meaning of the Reform Act.
See  "Special  Note Regarding Forward-Looking Statements" for additional factors
relating  to  such  statements.

     The  following  discussion  and analysis should be read in conjunction with
the  Company's  Consolidated  Financial  Statements  and Notes thereto appearing
elsewhere  in  this  Report.

     The  following  discussion  is  intended  to assist in understanding of the
Company's  financial  position as of February 28, 2003 and results of operations
for  the  year  ended  February  28,  2003.  The  financial statements and notes
included in this report contain additional information and should be referred to
in  conjunction  with  this  discussion.

The  Company

     We  are  the oldest and one of the largest viatical settlement companies in
the  United States. Our revenues are primarily derived from fees associated with
facilitating  viatical  settlements,  and  to  a  lesser   extent,  senior  life
settlements.

Comparison  of  Years  Ended  February  28,  2003  and  February  28,  2002

     We  had  net  income  of $1,879,144 for the year ended February 28, 2003 as
compared  to  net loss of $(988,517) for the year ended February 28, 2002.  This
increase  in net income is attributable primarily to the following factors:  (1)
a 41% increase in the average revenues per settlement and (2) an 90% increase in
the  number  of  settlements, offset in part by (3) a 164% increase in brokerage
and  referral fees (4) a 37% increase in general and administrative expenses and
(5)  an  income  tax  accrual  of  $650,500  in  2003.

     Revenues - Revenues increased by $7,620,909 or 167% from $4,557,542 in 2002
to $12,178,433 in 2003. This increase was due primarily to a 41% increase in the
average  revenue per viatical settlement from $26,497 in 2002 to $37,357 in 2003
and  a  90%  increase  in  the  number  of  viatical  settlements.

     The  increase  in  the  number of viatical settlements was due to increased
demand for viatical settlements from investors. We believe the increasing demand
results  from  investor trends toward diversifying their portfolios and avoiding

                                       21
<PAGE>

economically  sensitive  investments.    Although  some  economic  sectors  have
stabilized  since  the  collapse of the technology sector, investors appear much
more apprehensive with regard to equity markets in general and this apprehension
fuels  their  interest  in  our services as more investors consider viatical and
life  settlements as an alternative investment. In addition, depressed yields in
the  bond  market  have  also forced private and institutional investors to seek
other  investment  vehicles.

     As the oldest and largest provider of viatical settlements, we benefit from
of  these  trends  in  the investing community.  The increase in the most recent
quarter  was  the  result  of  increases  in  demand  for our services from both
domestic  and  international  investors.  Approximately  45% of our business for
the  year  was  from domestic investors while approximately 55% was from foreign
investorsWe  believe  domestic  demand  will  continue to grow, especially with
continued  economic  uncertainty  and  stock market volatility.  We have noted a
substantial increase in investor interest from the Pacific Rim and South America
over  the past year and have cultivated relationships with financial planners in
these  areas  to  promote  our  services  in  these  regions

     Brokerage and Referral Fees - Brokerage and referral fees increased 164% or
$3,796,699  from  $2,316,141 in 2002 to $6,112,840 in 2003. This increase is due
primarily  to a 167% increase in revenues. Brokerage and referral fees generally
increase  or decrease with revenues and the volume of transactions, although the
exact  ratio may vary according to a number of factors. Brokers may adjust their
fees with the individual viators whom they represent. In some instances, several
brokers  may compete for representation of the same viator, which will result in
lower broker fees. No broker fees are paid when a viator is not represented by a
broker  and  presents a policy to us directly. Referral fees also vary depending
on  factors  such  as  varying  contractual  obligations,  market  demand  for a
particular  kind  of  policy  or life expectancy category, individual agreements
between  clients and their referring financial planners. We pay no referral fees
when  clients  approach  us  directly.

     Expenses  -General and administrative expenses increased by 37% or $917,345
from  $2,460,431  in  2002  to  $3,377,776 in 2003.  The increase in general and
administrative  expenses  is due primarily to (1) increases in employee salaries
and  benefits, especially related to increases in health care premiums (2) legal
fees, primarily fees for transactional work related to a purchasing platform for
life  settlements  and  litigation  against  the  Internal  Revenue Service, (3)
substantially  increased  advertising  costs  commensurate  with  the increasing
demand  for  qualified policies.  There were no material changes in depreciation
expense,  interest  and  other  income  or  interest  expense.

     Cumulative  Effect  of  Change  in  Accounting  Principles - During 2002 we
incurred  a  charge of $143,750 related to the cumulative effects of a change in
accounting  principles.  No  such  charge  was  incurred  in  2003.

     Income  Taxes  -  Income  tax expense increased by $623,256 from $27,244 in
2002  to  $650,500  in  2003.  The  income  tax accrual is due to the net income
recognized  during  the  current  and  preceding  quarters.

                                       22
<PAGE>

Liquidity  and  Capital  Resources

     Operating  Activities - Net cash flows provided by operating activities for
the  year  ended  February  28, 2003 was $2,690,005 compared with net cash flows
used  in  operating activities of $205,876 for the year ended February 28, 2002.
This increase in cash flows from operating activities was attributable primarily
to  net  income  of  $1,879,144,  and augmented by $588,504 increase in accounts
payable  and  accrued liabilities as well as an addition to income taxes payable
of $500,500 and utilization of $127,803 of prepaid expense and offset in part by
an  increase  in  accounts  receivable  to  $406,228.

     During  the  year,  we  paid  dividends  of $1,103,169 and paid $623,723 to
purchase  144,891  shares  of  its  common  stock.

     The  Company's strategy is to increase cash flows generated from operations
by   increasing   revenues   while  controlling   brokerage   and  general   and
administrative  expenses.  We believe that domestic and international demand for
both  viatical  and life settlements will continue to grow during the next year,
especially  as  the  prospects  for  economic  conditions  remain  uncertain. In
response  to  the  projected  demand  for qualified viatical and life settlement
policies,  we  are  increasing  our  advertising  and  educational  awareness to
potential  sellers  of  policies  and  have  made  substantial  progress  in the
development  of  a  purchasing  platform for our senior life settlements.

     At  February  28,  2003, the Company had working capital of $3,276,621.  We
believe  future  viatical settlement operations will generate sufficient profits
and  cash flows to meet the Company's anticipated working capital needs for this
business  segment. We believe that senior life settlements will be marketed in a
manner  similar to viatical settlements as well as through pooled securitization
arrangements.  We  intend  to  pursue both methods as the senior life settlement
market  develops.

New  Accounting  Pronouncements

     In  August  2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143, Accounting for Obligations Associated
with  the  Retirement  of Long-Lived Assets (SFAS 143).  In April and June 2002,
The  Financial  Accounting  Standards  Board  issued Standard No. 145, Reporting
Gains  and  Losses from Extinguishment of Debt (SFAS 145), and Standard No. 146,
Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146).  In
December 2002, the Financial Accounting Standards Board issued Standard No. 148,
Accounting  for Stock-Based Compensation - Transition and Disclosure (SFAS 148).

     SFAS  143  establishes   accounting   standards  for  the  recognition  and
measurement  of  an  asset  retirement  obligation   and  its  associated  asset
retirement  cost.  It  also  provides  accounting guidance for legal obligations
associated  with  the  retirement  of  tangible  long-lived  assets. SFAS 143 is
effective  in  fiscal  years  beginning after June 15, 2002, with early adoption
permitted.  The  provisions  of  SFAS  143  do not have a material impact on our
consolidated  results of operations and financial position.  We adopted SFAS 143
effective  January  1,  2003.

     SFAS  145  rescinds No.4, Reporting Gains and Losses from Extinguishment of
Debt,  SFAS  No. 44, Accounting for Intangible Assets of Motor Carriers and SFAS

                                       23
<PAGE>

No.  64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS
145  amends  SFAS  No.  13, Accounting for Leases, to eliminate an inconsistency
between  the  required  accounting  for sale-leaseback transactions. SFAS 145 is
effective  in  fiscal  years  beginning  after May 15, 2002, with early adoption
permitted.  The  provisions  of  SFAS  145  do not have a material impact on our
consolidated  results  of operations and financial position. We adopted SFAS 145
effective  January  1,  2003.

     SFAS  146, Accounting for Costs Associated with Exit or Disposal Activities
addresses  the  accounting  and  reporting  for  costs  associated  with exit or
disposal  activities.  SFAS  146 requires that a liability for a cost associated
with  an exit or disposal activity be recognized when the liability is incurred.
Previously,  under  Emerging  Issues Task Force (ETIF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including  Certain Costs Insured in a Restructuring), a liability for
an  exit  cost  was  recognized at the date of an entity's commitment to an exit
plan.  Under  SFAS  146,  an  entity's commitment to a plan, by itself, does not
create  a present obligation to others that meets the definition of a liability.
Therefore,  SFAS 146 eliminates the definition of exit costs in Issue 94-3. SFAS
146 also establishes that fair value is the objective for initial measurement of
the  liability.  The  provisions  of SFAS 146 are effective for exit or disposal
activities  that  are  initiated  after  December  31, 2002, with early adoption
permitted.  The  provisions  of  SFAS  146  do not have a material impact on our
consolidated  results  of operations and financial position. We adopted SFAS 146
effective  January  1,  2003.

     SFAS  148,  Accounting  for   Stock-Based  Compensation  -  Transition  and
Disclosure,  amends No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method  of  accounting  for stock-based employee compensation. In addition, SFAS
148  amends  the  disclosure  requirements  of SFAS No. 123 to require prominent
disclosures  in both annual and interim financial statements about the method of
accounting  for  stock-based  employee compensation and the effect of the method
used  in  reported  financial  results.  SFAS  148,  paragraphs 2(a) - 2(e), are
effective  for  financial  statements for fiscal years ending after December 15,
2002. SFAS 148, paragraph 2(f), and the amendment to APB Opinion No. 28, Interim

Financial  Reporting,  shall  be  effective  for  financial  reports  containing
condensed  financial statements for interim periods beginning after December 15,
2002.  Earlier  adoption  is  permitted.

     We  adopted  the  disclosure  provisions of SFAS 148 effective December 31,
2002.  As  permitted  under  SFAS  148,  we  continue  to  apply the recognition
provisions  of  APB Opinion No. 25, Accounting for Stock Issued to Employees, in
determining  our  compensation  expense.

Item  7.  Financial  Statements

     The  Company's  audited  financial  statements, together with the report of
auditors,  are  included  in  the  report  after  the  signature  page.

                                       24
<PAGE>

Item  8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
Financial  Disclosure

     None.

                                    PART III

Item  9.  Directors,  Executive  Officers,  Promoters  and  Control  Persons;
Compliance  with  Section  16(a)  of  the  Exchange  Act

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  10.  Executive  Compensation

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  11.  Security  Ownership  of  Certain  Beneficial  Owners  and Management

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  12.  Certain  Relationships  and  Related  Transactions

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  13.  Exhibits  And  Reports  on  Form  8-K

(a)  Exhibits

Exhibit  No.  10.2  is  a  management  contract  or  compensatory  plans  or
arrangements.

     Number                       Description
     ------                       -----------

      3.1        Articles  of  Incorporation,  dated  May  20,  1971  (1)

      3.2        Bylaws  (1)

      4.1        Form  of  stock  certificate  for  our  common  stock  (1)

     10.1        Share  exchange  agreement  between  I.G.E., Inc.  and us dated
                 January 18, 2000  (1)

                                      25
<PAGE>

     10.2        LPHI  Licensee  Incentive  Stock  Reward  Plan  (1)

     21          Subsidiaries  of  the  Issuer

     99.1        Section  1350  Certification

     (1)         These exhibits  were  filed  with  the  Company's Annual Report
                 on Form 10-KSB  for  the year  ended February 29, 2000, and are
                 incorporated by reference herein.

(b)  Reports  on  Form  8-K:

     We  filed  the  following  Form 8-K's during the quarter ended February 28,
2003:

     Date                           Covering
     ----                           --------

     12/05/02     A  press  release  announcing  fiscal  third quarter  revenues

     1/15/03      A press release announcing results of  operations for the nine
                  months  ended  November  30,  2002

     1/30/03      A  press release  announcing  a  Standard & Poor's listing for
                  the common  stock

     2/14/03      A  press  release  announcing  an  increase  in  the quarterly
                  dividend

Item  14.  Controls  and  Procedures

     Evaluation  of  disclosure  controls  and  procedures.  As  of  a date (the
"Evaluation Date") within 90 days before the filing date of this Report, our CEO
and  CFO  evaluated  the effectiveness of the Company's "disclosure controls and
procedures"  (as  defined in the Securities Exchange Act of 1934 Rules 13a-14(c)
and 15-d-14(c)).  They concluded that, as of the Evaluation Date, the disclosure
controls  and  procedures  were  effective  and designed to ensure that material
information  relating  to the Company and its consolidated subsidiaries would be
made  known  to  them  by  others  within  those  entities.

     Changes  in  internal  controls.  After  the Evaluation Date, there were no
significant  changes in the Company's internal controls or in other factors that
could  significantly  affect  those  controls.






                                       26

<PAGE>
                                   SIGNATURES

     In  accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                           Life  Partners  Holdings,  Inc.

May  29,  2003                             By:/s/  Brian  D.  Pardo
                                                   -----------------------------
                                                   Brian D. Pardo
                                           President and Chief Executive Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons on behalf of the registrant and in the capacities and on
the  dates  indicated.
<TABLE>
<CAPTION>
       Name                               Title                        Date
       ----                               -----                        ----
<S>                                <C>                             <C>
/s/  Brian  D.  Pardo              President,  Principal           May  29, 2003
     ---------------------         Executive  Officer,  and
     Brian  D.  Pardo              Director

/s/  Nina  Piper                   Treasurer                       May  29, 2003
     ---------------------
     Nina  Piper

/s/  R.  Scott  Peden              Secretary, Director             May  29, 2003
     ---------------------
     R.  Scott  Peden

/s/  Tad  Ballantyne               Director                        May  29, 2003
     ---------------------
     Tad  Ballantyne

/s/  Jacqueline  Davis             Director                        May  29, 2003
     ---------------------
     Jacqueline  Davis

/s/  Dwight  Pierce                Director                        May  29,  2003
     ---------------------
     Dwight  Pierce
</TABLE>

                                       27
<PAGE>

                                  CERTIFICATION
                           PURSUANT TO SECTION 13a-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I,  Brian  D.  Pardo,  certify  that:

1.  I  have  reviewed  this  annual  report  on  Form  10-KSB  of  Life Partners
    Holdings,  Inc.;

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
    statement  of a  material fact or omit to state a material fact necessary to
    make  the  statements  made, in  light of the circumstances under which such
    statements  were made,  not misleading with respect to the period covered by
    this  annual report;  and

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
    information  included  in this annual report, fairly present in all material
    respects  the  financial  condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report.

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
    establishing and  maintaining disclosure controls and procedures (as defined
    in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and

     (c) presented in this annual report our conclusions about the effectiveness
          of  the  disclosure controls and procedures based on our evaluation as
          of  the  Evaluation  Date;

5.  The  registrant's  other  certifying  officers  and  I have disclosed, based
    on  our  most  recent evaluation, to the registrant's auditors and the audit
    committee  of  registrant's  board  of  directors (or persons performing the
    equivalent  function):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     (b)  any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
    annual  report  whether  there were significant changes in internal controls
    or  in  other  factors  that  could  significantly  affect internal controls
    subsequent  to  the  date  of  our  most  recent  evaluation,  including any
    corrective  actions  with  regard  to  significant deficiencies and material
    weaknesses.

Date:  May  29,  2003
                                                    /s/ Brian D. Pardo
                                                    ----------------------------
                                                    Brian D. Pardo
                                                    Chairman of the Board and
                                                      Chief Executive Officer


                                       28
<PAGE>

                                  CERTIFICATION
                           PURSUANT TO SECTION 13a-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I,  Nina  Piper,  certify  that:

1.  I  have  reviewed  this  annual  report  on  Form  10-KSB  of  Life Partners
    Holdings,  Inc.;

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
    statement  of a  material fact or omit to state a material fact necessary to
    make  the  statements  made, in  light of the circumstances under which such
    statements  were made,  not misleading with respect to the period covered by
    this  annual report;  and

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
    information  included  in this annual report, fairly present in all material
    respects  the  financial  condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report.

4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
    establishing and  maintaining disclosure controls and procedures (as defined
    in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and

     (c) presented in this annual report our conclusions about the effectiveness
          of  the  disclosure controls and procedures based on our evaluation as
          of  the  Evaluation  Date;

5.  The  registrant's  other  certifying  officers  and  I have disclosed, based
    on  our  most  recent evaluation, to the registrant's auditors and the audit
    committee  of  registrant's  board  of  directors (or persons performing the
    equivalent  function):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     (b)  any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
    annual  report  whether  there were significant changes in internal controls
    or  in  other  factors  that  could  significantly  affect internal controls
    subsequent  to  the  date  of  our  most  recent  evaluation,  including any
    corrective  actions  with  regard  to  significant deficiencies and material
    weaknesses.

Date:  May  29,  2003
                                         /s/ Nina Piper
                                         --------------------------------------
                                         Nina Piper
                                         Chief Financial Officer


                                       29
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2003 and 2002


                                    Contents


Independent  Auditor's  Report                                              F-2

Audited  Consolidated  Financial  Statements:

     Consolidated  Balance  Sheets                                          F-3

     Consolidated  Statements  of  Operations                               F-5

     Consolidated  Statements  of  Shareholders'  Equity                    F-6

     Consolidated  Statements  of  Cash  Flows                              F-7

     Notes  to  the  Financial  Statements                                  F-8


















                                      F-1

<PAGE>

                          Independent Auditors' Report

To  the  Board  of  Directors
Life  Partners  Holdings,  Inc.

We  have  audited  the  accompanying consolidated balance sheet of LIFE PARTNERS
HOLDINGS,  INC. as of February 28, 2003, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the years ended February
28,  2003  and  2002.  These  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

As  discussed  in  Note  6, on September 20, 2001, Life Partners, Inc., a wholly
owned subsidiary of Life Partners Holdings, Inc. received a notice of deficiency
from the Internal Revenue Service for the fiscal years ended September 30, 1993,
1994  and  1995  in  the  amount of $1,755,624 plus penalties of $351,124 and an
unspecified  amount  of  interest.   Management  is  vigorously  defending  Life
Partners, Inc. against this claim and has filed a suit in tax court denying this
liability.  The Company's legal counsel has advised the Company that it may have
some liability in connection with this claim by the Internal Revenue Service but
is  unable  to  provide an estimate as to what this liability might be.  Because
the  Company  is unable to estimate its liability in connection with this claim,
no  liability related to this claim has been recorded in the Company's financial
statements  as  of February 28, 2003.  Settlement of this claim will result in a
reduction  in  net income in the period in which the liability can be reasonably
estimated.

In our opinion the financial statements referred to in the first paragraph above
present  fairly,  in  all  material  respects,  the  financial  position of Life
Partners  Holdings,  Inc.  as  of  February  28,  2003,  and  the results of its
operations and its cash flows for the years ended February 28, 2003 and 2002, in
conformity with accounting principles generally accepted in the United States of
America.

As  discussed in Note 3, the Company changed its method of reporting revenues to
take  into  consideration  certain  nominal  services  performed  by the Company
subsequent to closing of the viatical settlement.  The cumulative effect of this
change in accounting methods resulted in a one-time charge of $143,750, which is
reflected  in  the  financial  statements at February 28, 2002.  During the year
ended  February  28,  2003, the Company changed its income recognition method to
record  income  at  the  time  a settlement has been closed and the investor has
obligated  himself  to  making  the  investment.  Prior  to  2003,  income  was
recognized when the payment was received.  This change in method had no material
effect  on  prior  periods.


MURRELL,  HALL,  MCINTOSH  &  CO.,  PLLP


Oklahoma  City,  Oklahoma

April  29,  2003



                                      F-2
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.

                           CONSOLIDATED BALANCE SHEET

                                FEBRUARY 28, 2003

                                  Page 1 of 2


                                     ASSETS
<TABLE>
<CAPTION>
CURRENT  ASSETS:
<S>                                                               <C>
     Cash                                                         $   5,242,863

     Accounts receivable
          Trade                                                         179,703

          Shareholders                                                  190,694

          Employees  and  other                                          61,146

     Prepaid expenses                                                     2,796
                                                                  -------------

       Total current assets                                           5,677,202
                                                                  -------------

PROPERTY  AND  EQUIPMENT:

     Land and building                                                  853,123

     Machinery and equipment                                            223,297

     Transportation equipment                                           151,451
                                                                  -------------

                                                                      1,227,871

     Accumulated depreciation                                          (232,082)
                                                                  -------------

                                                                        995,789
                                                                  -------------

OTHER  ASSETS:

     Premium advances net of reserve for uncollectible
       of $564,441                                                            -

     Other                                                               86,045
                                                                  -------------
                                                                         86,045
                                                                  -------------

       Total Assets                                               $   6,759,036
                                                                  =============
</TABLE>


               See accompanying notes to the financial statements


                                      F-3
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.

                           CONSOLIDATED BALANCE SHEET

                                FEBRUARY 28, 2003

                                  Page 2 of 2


                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENT  LIABILITIES:
<S>                                                               <C>
     Accounts  payable                                            $     335,552

     Accrued  liabilities  -  contingencies  and other                1,377,646

     Current  portion  of  long  term-debt                               28,733

     Deferred  revenue                                                  158,150

     Income  taxes  payable                                             500,500
                                                                  -------------

       Total  current  liabilities                                    2,400,581
                                                                  -------------

LONG-TERM  DEBT,  net  of current portion shown above                   555,069
                                                                  -------------

SHAREHOLDERS'  EQUITY:

     Common stock, $0.01 par value 10,000,000 shares                     97,114
     authorized;  9,484,875  shares  issued  and  outstanding

     Additional  paid-in  capital                                    10,286,988

     Accumulated  deficit                                            (6,102,285)

     Less:  Notes  receivable issued for common stock                  (478,431)
                                                                  -------------

       Total  shareholders'  equity                                   3,803,386
                                                                  -------------

       Total  Liabilities  and  Shareholders' Equity              $   6,759,036
                                                                  =============
</TABLE>


              See accompanying notes to the financial statements.

                                      F-4
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED FEBRUARY 28, 2003 AND 2002

<TABLE>
<CAPTION>
                                                      2003              2002
                                                --------------   --------------
<S>                                             <C>              <C>
REVENUES                                        $   12,178,433   $    4,557,524

BROKERAGE  AND  REFERRAL  FEES                       6,112,840        2,316,141
                                                --------------   --------------

REVENUES,  NET  OF  BROKERAGE  FEES                  6,065,593        2,241,383
                                                --------------   --------------

OPERATING  AND  ADMINISTRATIVE  EXPENSES:

     General  and  administrative                    3,377,776        2,460,431

     Accrued  contingency  costs                       232,867          680,571

     Depreciation                                       62,917           52,384
                                                --------------   --------------
                                                     3,673,560        3,193,386
                                                --------------   --------------

INCOME  (LOSS)  FROM  OPERATIONS                     2,392,033         (952,003)
                                                --------------   --------------

OTHER  INCOME  (EXPENSES):

     Interest  and  other  income                      190,266          192,956

     Interest  expense                                 (52,655)         (58,476)
                                                --------------   --------------

                                                       137,611          134,480
                                                --------------   --------------

INCOME  (  LOSS)  BEFORE  INCOME  TAXES              2,529,644         (817,523)

INCOME  TAXES:
     Current  tax  expense                             650,500           27,244
                                                --------------   --------------

INCOME  (L0SS)  BEFORE  CUMULATIVE  EFFECT
     FOR  CHANGE  IN  ACCOUNTING  PRINCIPLE          1,879,144         (844,767)

CUMULATIVE  EFFECT OF CHANGE ON YEARS
     PRIOR TO 2001                                           -         (143,750)
                                                --------------   --------------

NET  INCOME (LOSS)                              $    1,879,144   $     (988,517)
                                                ==============   ==============

PER  SHARE  EARNINGS  OF
     (  LOSS  PER  SHARE)                       $         0.20   $        (0.11)
                                                ==============   ==============

AVERAGE  COMMON  AND  COMMON
     EQUIVALENT  SHARES  OUTSTANDING                 9,484,785        9,367,142
                                                ==============   ==============
</TABLE>

              See accompanying notes to the financial statements.


                                      F-5
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED FEBRUARY 28, 2003 AND 2002

<TABLE>
<CAPTION>
                                  Common Stock
                              --------------------
                                Number     $0.010    Additional                                Treasury Stock          Total
                                                                                            ---------------------
                                  of         par      Paid-In    Accumulated     Note       Number of               Shareholders'
                                Shares     Value      Capital      Deficit     Receivable      Shares      Amount      Equity
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------
Balance,
<S>                           <C>         <C>       <C>          <C>            <C>          <C>         <C>        <C>
  February 28, 2001           10,000,000  $100,000  $ 6,359,371  $(5,645,309)   $(300,041)    1,410,151  $(308,986) $    205,035

Treasury stock sold for cash           -         -    4,740,229            -            -    (1,017,778)         -     4,740,229

Repurchases of common stock            -         -            -            -            -         2,406    (28,789)      (28,789)

Issuance of additional
shares of treasury stock
for adjustments to
purchase price                                                                                   (4,455)

Treasury stock sold for
note receivable                        -         -      155,000            -     (155,000)      (20,000)         -             -

Additional principal on
renewed note receivable                                                           (24,004)                               (24,004)

Dividends                                                           (244,234)                                           (244,234)

Net loss for the year
  ended  February 28, 2002             -         -            -     (988,517)           -             -          -      (988,517)
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------

Balance,
  February 28, 2002           10,000,000   100,000   11,254,600   (6,878,060)    (479,045)      370,324   (337,775)    3,659,720

Purchases of treasury stock            -        -             -            -            -       144,891   (632,723)     (632,723)

Payments on notes receivable           -        -             -            -          614             -          -           614

Dividends declared                     -        -             -   (1,103,369)           -             -          -    (1,103,369)

Treasury stock retired          (288,600)  (2,886)     (967,612)                               (288,600)   970,498

Net income for the year
  ended February 28, 2003              -        -             -    1,879,144            -             -          -     1,879,144
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------

Balance,
  February 28, 2003            9,711,400  $97,114   $10,286,988  ($6,102,285)   ($478,431)      226,615  $       0    $3,803,386
                               =========  =======   ===========  ===========   ==========   ===========  =========   ===========
</TABLE>

              See accompanying notes to the financial statements.

                                      F-6
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED FEBRUARY 28, 2003 AND 2002

<TABLE>
<CAPTION>
                                                          2003          2002
                                                     -------------  ------------
CASH  FLOWS  FROM  OPERATING  ACTIVITIES:
<S>                                                  <C>             <C>
  Net income (loss)                                  $  1,879,144     ($988,517)
  Adjustments  to  reconcile  net  income  to
  operating  activities-

    Depreciation                                           62,917        52,384

    Decrease (increase) in accounts receivable           (406,228)      (22,698)

    Decrease (increase) in prepaid expenses               127,803       (73,985)

    (Increase) decrease in other assets                   (77,036)       81,188

    Increase (decrease) in accounts payable               211,232        80,620

    Increase in accrued liabilities                       377,273       665,132

    Increase (decrease) in income taxes payable           500,500             -

    Increase in unearned revenue                           14,400             -
                                                     -------------  -----------

  Net cash provided by (used in) operating
  activities                                            2,690,005      (205,876)
                                                     -------------  -----------

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:

     Payment on note receivable                             4,603             -

     Loss on disposal of property and equipment             1,138             -

     Purchases of property and equipment                 (216,974)      (30,408)
                                                     -------------  -----------

   Net cash used in investing activities                 (211,233)      (30,408)
                                                     -------------  -----------

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:

     Proceeds from notes payable                                -          4,702

     Payments on note payable                             (25,109)       (22,609)

     Purchases of treasury stock                         (632,723)       (28,789)

     Proceeds from issuance of common stock                     -      4,740,229

     Dividends                                         (1,103,369)      (244,234)
                                                     -------------  ------------

  Net cash provided by financing activities            (1,761,201)     4,449,299
                                                     -------------  ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      717,571      4,213,015

CASH AND CASH EQUIVALENTS,  BEGINNING OF PERIOD         4,525,292        312,277
                                                     -------------  ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD             $  5,242,863   $  4,525,292
                                                     ============   ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S>                                                  <C>            <C>
  Interest paid, net of capitalized amounts          $     52,655   $     58,476
                                                     ============   ============

  Income taxes paid                                  $    150,000   $          -
                                                     ============   ============
</TABLE>

              See accompanying notes to the financial statements.

                                      F-7
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 2003


(1)  DESCRIPTION  OF  BUSINESS

Life  Partners  Holdings,  Inc. (the "Company") formerly IGE, Inc. was organized
under  the  laws  of  the  Commonwealth  of  Massachusetts in 1971, but had been
dormant and without operations since 1985. On January 18, 2000, the shareholders
of  Life  Partners  Holdings,  Inc. and Life Partners, Inc. (LPI) entered into a
share  exchange agreement whereby LPI became a wholly owned operating subsidiary
of  the  Company. Pursuant to a shareholder approved resolution, the The Company
was redomesticated  to  Texas  on  February  19,  2003.

The  Company's  subsidiaries  are  as  follows:

LPI  is  a  viatical  settlement company established in 1991 and incorporated in
State of Texas for the purpose of assisting persons in facilitating the purchase
of  the life insurance policies of terminally ill persons at a discount to their
face  value.

Extended  Life  Services,  Inc.  was established in 1998 and incorporated in the
State  of  Texas  to  engage in senior life settlement transactions by assisting
elderly  individuals  to  reallocate  their  assets from insurance policies into
assets  used  for  long-term  care  coverage,  annuities,  investments,  etc.

(2)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

The  following  is  a summary of significant accounting policies followed by the
Company:

Cash  and  Cash  Equivalents  - For purposes of the statement of cash flows, the
Company  considers  all  short-term debt securities purchased with a maturity of
three  months  or  less  to  be  cash  equivalents.  The  average balance of the
Company's  general  checking account balance is generally in excess of $100,000.
The  Federal  Deposit  Insurance  Corporation  insures  all  bank accounts up to
$100,000.  Management  believes its exposure to loss is minimal considering only
the  amounts in excess of $100,000 are at risk and the depository bank is a well
established  national  bank  and  one  of  the  nation's  largest  financial
institutions.

Consolidation  -  The  consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, as described in Note 1 above. All
significant  inter-company  accounts  and  transactions  have been eliminated in
consolidation.

Revenue  Recognition  - Prior to fiscal 2002, revenues were recognized as of the
settlement  date of the viatical purchase by investors. During 2002, the Company
changed  its  method  of  recording income to defer $100 per settlement to cover
minor  monitoring  services  provided  subsequent  to the settlement date and to
amortize  this  deferred  cost  over  the  anticipated  life  expectancy  of the
insureds. See Note 3 for further details. During the fiscal years ended February
28,  2003  and  2002,  all  settlement  revenues  were  generated  from viatical
settlements.  No settlement revenues were generated from senior life settlements
during  these  years.

During  the  year  ended  February  28,  2003,  the  Company  changed its income
recognition method to record income at the time a settlement has been closed and
the  investor  has  obligated  himself to making the investment.  Prior to 2003,
income  was recognized when the payment was received.  This change in method had
no  material  effect  on  prior  periods.

                                      F-8
<PAGE>

Investment  in  Life Insurance Policies - In accordance with Financial Standards
Board  Technical Bulletin 85-4 "Accounting for Purchases of Life Insurance", the
Company  reduces  its  investment  in  life  insurance  policies  to  their cash
surrender value with any differences between cost and cash surrender value being
charged  to expense. At February 28, 2003, the Company held investments in eight
life  insurance  policies  with face value amounts totaling $163,259, which have
been  reduced  to  the  carrying  value  of  $880.

Property  and  Equipment  - The Company's property and equipment are depreciated
over  their  useful  lives  using the straight-line method.  The useful lives of
property  and  equipment  for  purposes  of  computing  depreciation  are:
<TABLE>
<CAPTION>
<S>                                        <C>
          Building                               30  years
          Machinery  and  equipment               5  years
          Transportation  equipment        5  to  9  years
</TABLE>

Impairment  of  Long-lived  Assets - The Company accounts for the impairment and
disposition  of  long-lived  assets in accordance with SFAS No. 121, "Accounting
for  the  Impairment  of  Long-lived  Assets  to  be  Disposed of" (FAS 121). In
accordance with FAS 121, long-lived assets to be held are reviewed for events or
changes  in  circumstances,  which indicate that their carrying value may not be
recoverable.  As  of  February  28,  2003,  no  impairment  has  been indicated.

Income  Taxes  - Timing differences between the reporting of income and expenses
for  financial  and  income  tax reporting purposes are reported as deferred tax
assets, net of valuation allowances, or as deferred tax liabilities depending on
the cumulative effect of all timing differences. See Note 6 for further details.

Use  of  estimates  - The preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that  affect  the  amounts  reported and contingent assets and
liabilities disclosed in the financial statements and accompanying notes. Actual
results  inevitably will differ from those estimates and such differences may be
material  to  the  financial  statements.

Earnings  (Loss)  Per  Share  - Basic earnings (loss) per share computations are
calculated on the weighted-average of common shares and common share equivalents
outstanding during the year, reduced by the treasury stock. Common stock options
and  warrants  are  considered  to  be  common share equivalents and are used to
calculate  diluted  earnings per common and common share equivalents except when
they  are  anti-dilutive.

NOTE  3  -  ACCOUNTING  CHANGES

In  August  2001,  the  Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 143, Accounting for Obligations Associated
with  the  Retirement  of Long-Lived Assets (SFAS 143).  In April and June 2002,
the  Financial  Accounting  Standards  Board  issued Standard No. 145, Reporting
Gains  and  Losses  from Extinguishment of Debt (SFAS 145) and Standard No. 146,
Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146).  In
December  2002,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standard  No.  148,  Accounting  for  Stock-Based
Compensation-Transition  and  Disclosure  (SFAS  148).

SFAS 143 establishes accounting standards for the recognition and measurement of
an asset retirement obligation and its associated asset retirement cost. It also
provides  accounting  guidance   for   legal  obligations  associated  with  the
retirement  of tangible long-lived assets. SFAS 143 is effective in fiscal years
beginning  after June 15, 2002, with early adoption permitted. The provisions of
SFAS  143 do not have a material impact on the Company's consolidated results of
operations  and  financial  position.  The  Company  adopted  SFAS 143 effective
January  1,  2003.

                                      F-9
<PAGE>

SFAS  145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of
Debt,  SFAS  No. 44, Accounting for Intangible Assets of Motor Carriers and SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.  SFAS
145  amends  SFAS  No.  13, Accounting for Leases, to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting  for  certain lease modifications that have economic effects that are
similar  to  sale-leaseback transactions.  SFAS 145 is effective in fiscal years
beginning  after May 15, 2002, with early adoption permitted.  The provisions of
SFAS  145 do not have a material impact on the Company's consolidated results of
operations  and  financial  position.  The  Company  adopted  SFAS 145 effective
January  1,  2003.

SFAS  148,  Accounting for Stock-Based Compensation - Transition and Disclosure,
amends SFAS 123, Accounting for Stock-Based Compensation, to provide alternative
methods  of  transition  for a voluntary change to the fair value base method of
accounting  for stock based employee compensation.  In addition, SFAS 148 amends
the  disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method for accounting for
stock-based  employee compensation and the effect of the method used in reported
financial results.  SFAS 148, paragraphs 2(a) - 2(e) are effective for financial
statements for fiscal years ending after December 15, 2002.  Earlier application
is  permitted.  SFAS  148,  paragraph 2(f), and the amendment to APB Opinion No.
28,  Interim  Financial  Reporting,  shall  be  effective  for financial reports
containing condensed statements for interim periods beginning after December 15,
2002.  Earlier  adoption  is  permitted.

The Company adopted the disclosure provisions of SFAS 148 effective December 15,
2002.  As  permitted  under  SFAS  148,  the  Company  continues  to  apply  the
recognition  provisions  of  APB  Opinion No. 25, Accounting for Stock Issued to
Employees,  in  determining  its  stock  compensation  expense

During  the  year  ended  February  28,  2002, the Company changed its method of
reporting revenues to take into consideration certain nominal services performed
by  the Company subsequent to closing of the viatical settlement. These services
although  not  called for in the policy funding agreements entail monitoring the
insureds  progress and notifying the holder of the policy when the insured dies.
The  Company  has elected to change its policy funding agreement to specify that
this service will be performed and to charge an up front fee for this service of
$100 per policy. The fee will be deferred and amortized over the life expectancy
of  the  insured.  Prior  to  this  change,  all revenues were recognized on the
closing  date  for the acquisitions of the policies by investors. Management has
elected  to  record  the  cumulative effect of this change as if the Company had
always  charged  for  this  service.  The  cumulative  effect  of this change in
accounting  method  (assuming  the  Company had charged this fee from inception)
resulted  in  a one-time charge of $143,750, which is reflected in the financial
statements  at February 28, 2002. Proforma numbers reflecting the effect of this
change  as if the Company had reported earnings in this manner were not included
as  the  effects  would  have been immaterial to earnings during the years ended
February  28,  2003  and  2002.

During  the  year  ended  February  28,  2003,  the  Company  changed its income
recognition method to record income at the time a settlement has been closed and
the  investor  has  obligated  himself to making the investment.  Prior to 2003,
income  was recognized when the payment was received.  This change in method had
no  material  effect  on  prior  periods.

4)  LEASES

The  Company  leases  various  equipment  under  non-cancelable operating leases
expiring  in  various  years  through  2008.

                                      F-10
<PAGE>

Minimum  future  rental  payments  under  non-cancelable operating leases having
remaining  terms  in  excess of one year as of February 28, 2003 for each of the
next  five  years  and  in  the  aggregate  are:

<TABLE>
<CAPTION>
       Twelve months ending February 28,           Amount
       ---------------------------------           ------
<S>                                              <C>
                    2004                         $  25,676
                    2005                            25,676
                    2006                            25,676
                    2007                            25,676
                    2008                            12,837
                                                 ---------
                      Total minimum future
                      rental  payments           $ 115,541
                                                 =========
</TABLE>

Rental  expense  consisted  of minimum lease payments of $36,276 and $26,020 for
the  years  ended  February  28,  2003  and  2002,  respectively.

Certain operating leases provide for renewal and/or purchase options. Generally,
purchase  options  are  at prices representing the expected fair market value of
the  property  at  the  expiration  of  the  lease term. Renewal options are for
periods  of  one  year  at  the  rental  rate  specified  in  the  lease.

(5)  LONG-TERM  DEBT

As  of  February  28,  2003,  the  Company  had  the  following  long-term debt:
<TABLE>
<CAPTION>
                                                      Current     Long-Term
                                                      -------     --------
9.25%  note  payable  to  a  bank,  due  in
installments  of  $6,638  through  June  2015,
<S>                                                   <C>          <C>
secured  by  land  and  office  building              $27,078      $553,596

25%  capital  lease  payable
to  finance  company,  due  in
monthly  installments  of
$86  through  November
2004,  secured  by  equipment                             740           753

25%  capital  lease  payable
to  finance  company,  due  in
monthly  installments  of
$102  through  October  2004,
secured  by  equipment                                    915           720
                                                      -------      --------
                                                      $28,733      $555,069
                                                      =======      ========
</TABLE>





                                      F-11
<PAGE>

Maturities  on long-term debt for each of the next five years and thereafter are
as  follows:

<TABLE>
<CAPTION>
                                                          Amount
                                                        --------
<S>                                                     <C>
                              2004                      $  28,733
                              2005                         31,338
                              2006                         32,823
                              2007                         35,992
                              2008                         39,466
                              Thereafter                  415,450
                                                        ---------
                                                       $  583,802
                                                       ==========
</TABLE>

6)  INCOME  TAXES

As  of  February  28,  2003,  the  Company had no unused charitable contribution
deduction  carryforwards.

Temporary  timing  differences  between the reporting of income and expenses for
financial  and  income  tax reporting purposes at February 28, 2003, result in a
deferred  tax  asset  of  approximately $549,000, which was fully reserved as of
that  date.

Following are the components of this deferred tax asset as of February 28, 2003:

<TABLE>
<CAPTION>
          Excess  tax  over  financial  accounting  -
<S>                                                            <C>
            Depreciation                                       $  (15,000)
          Excess  financial  accounting  over  tax  -

            Accrued  contingency  costs                           313,000

            Reserve  for  bad  debts                              215,000
            Acquired  life  insurance  policies                    36,000
                                                               ----------
          Net  deferred  tax  asset                               549,000

          Less  valuation  allowance                             (549,000)
                                                               ----------
          Deferred  tax  asset,
            net  of  valuation  allowance                      $       --
                                                               ==========
</TABLE>

The  difference  between  the Company's effective income tax rate and the United
States  statutory  rate  and the State of Texas franchise tax rate is reconciled
below  for  the  years  ended  February  28,  2003  and  2002:

<TABLE>
<CAPTION>
                                                     2003     2002
                                                    ------   ------
<S>                                                 <C>        <C>
          United  States  statutory  rate            34.0%     0.0%
          State  of  Texas  statutory  rate           8.2%     0.0%
          Expected  combined  rate                   42.2%     0.0%
          Benefit  of  utilization  of
            net  operating  loss  carryforward      (16.5)%
          Other                                                3.1%
                                                    -----    -----
          Combined  effective  tax  rate             25.7%     3.1%
</TABLE>

On  September  20,  2001,  LPI received a notice of deficiency from the Internal
Revenue  Service for the fiscal years ended September 30, 1993, 1994 and 1995 in
the amount of $1,755,624 plus penalties of $351,124 and an unspecified amount of
interest.  Management is vigorously defending the Company against this claim and

                                      F-12
<PAGE>

has  filed  a  suit  in  tax  court  denying this liability. The Company's legal
counsel  has  advised  the  Company  that  is  has  may  have  some liability in
connection  with  this claim by the Internal revenue Service but they are unable
to  provide  an estimate as to what this liability might be. Because the Company
was unable to estimate its liability in connection with this claim, no liability
related to this claim has been recorded in the Company's financial statements as
of  February  28,  2003.

(7)  STOCK  TRANSACTIONS  AND  COMMON  STOCK  OPTIONS

May  24,  2001,  the  Company  entered  into  a  series  of  private  placement
transactions resulting in the sale of 1,000,000 shares of the Company's treasury
stock  at  $5.00  per  share.  The  Company's  net  proceeds totaled $4,650,000.

During  May,  2001,  the  Company  issued 17,778 shares of its treasury stock in
settlement  of  a  claim  against  the  Company.  This transaction was valued at
$80,000  for  financial  reporting  purposes.

On August 23, 2001, the Company issued 20,000 shares of its treasury stock to an
individual in exchange for a one-year note receivable in the amount of $155,000.
This  note bears interest at the rate of 6.5% per annum. For financial reporting
purposes,  this  note  has  been  reflected  as  a  reduction  in  the Company's
shareholders'  equity  section  similar  to  a  stock  subscription  receivable.

During the year ended February 28, 2003, the Company purchased 144,891 shares of
its  common  stock  for  $632,723.

On  February  11, 2002, the Company declared a $0.025 per common share dividend.
The  dividend  was  paid  on  February  28,  2002.

On  May  12, 2002, the Company declared a $0.025 per common share dividend.  The
dividend  was  paid  on  May  31,  2002.

On  August  31,  2002,  the Company declared a $0.025 per common share dividend.
The  dividend  was  paid  on  August  31,  2002.

On  November  30, 2002, the Company declared a $0.035 per common share dividend.
The  dividend  was  paid  on  December  15,  2002.

On  February  28,  2003, the Company declared a $0.03 per common share dividend.
The  dividend  was  paid  on  March  14,  2003.

     As  of  February  28,  2003  the Company has three stock-based compensation
plans  which  are  described  below.  The  Company  applies  APB  25 and related
interpretations  in  accounting  for  its plan. Compensation for services that a
corporation  receives under APB 25 through stock-based compensation plans should
be measured by the quoted market price of the stock at the measurement date less
the  amount,  if  any,  that the individual is required to pay.  No compensation
expense  was recorded during the years ended February 28, 2003, and 2002 related
to its stock option plans under APB 25.  If the Company had elected to recognize
compensation based on the fair value of the options granted at the grant date as
prescribed by "Statement of Financial Accounting Standards No. 123, ("SFAS 123")
Accounting  for  Stock-Based Compensation", net earnings (loss) and net earnings
(loss)  per  share would have increased to the pro forma amounts shown below for
the  years  ending  February  28,  2003  and  2002:

<TABLE>
<CAPTION>
                                                                              2003           2002
                                                                           ----------   -----------
<S>                                                                        <C>          <C>
     Pro forma net earnings (loss) applicable to common stockholders       $1,879,144   $  (988,517)

     Less:  Total  stock based compensation expense determined
     under fair value based method  for  all  awards,  net of
     related  tax  effect                                                     (22,420)      (55,095)
                                                                           ----------   -----------

     Pro  forma  net  earnings  (loss)  per  common  share                 $1,856,724   $(1,043,612)
                                                                           ==========   ===========

                                                                              2003           2002
                                                                           ----------   -----------

Earnings  (loss)  per  share:

Basic  -  as  reported                                                     $     0.20   $     (0.11)
                                                                           ==========   ===========
Basic  -  pro  forma                                                       $     0.20   $     (0.11)
                                                                           ==========   ==========

Diluted  -  as  reported                                                   $     0.20   $     (0.11)
                                                                           ==========   ===========
Diluted  -  pro  forma                                                     $     0.20   $     (0.11)
                                                                           ==========   ===========
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option pricing model with the following assumptions used for
grants:  weighted  average risk free interest rate of 2.123% and 3.056% for 2003
and  2002,  respectively;  volatility  of  40%;  and expected life less than two
years.  The  fair values of the options were based on the difference between the
present  value  of the exercise price of the option and the estimated fair value
price  of  the  common  share.

     The  intent  of  the  Black-Scholes  option  valuation  model is to provide
estimates of fair values of traded options that have no vesting restrictions and
are  fully  transferable.  Option  valuation  models  require  the use of highly
subjective  assumptions  including  expected stock price volatility. The Company
has  utilized  the  Black-Scholes  method  to  produce the pro forma disclosures
required  under  SFAS 123. In management's opinion, existing valuation models do
not  necessarily  provide  a  reliable  single  measure of the fair value of its
employee  stock  options  because  the  Company's  employee  stock  options have
significantly different characteristics from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate.  The effects of applying SFAS 123 in this pro forma are not indicative
of  future  amounts.

     On  February 1, 2002, pursuant to the Company's Omnibus Equity Compensation
Plan,  G.  Russell  Hagan Ltd. Partnership is entitled to purchase, on or before
February  1,  2004,  50,000  shares  of our common stock at a price of $4.50 per
share.  This  option may be exercised only upon notice of its exercise with full
purchased  price  for  the  amount  of  shares  purchased.

     On  October  1, 2002, pursuant to the Company's Omnibus Equity Compensation
Plan,  Compass  Settlement, LLC is entitled to purchase, on or before October 1,
2004,  50,000  shares  of  our  common stock at a price of $1.86 per share. This
option  may  be  exercised  only upon notice of its exercise with full purchased
price  for  the  amount  of  shares  purchased.

     As  of  February  28, 2002, the Company had 198,220 warrants outstanding at
exercise  prices  ranging from $7.25 to $9.375 per warrant for one share each of
the  Company's  treasury  stock.  In  January  2003,  147,000  of these warrants
expired.  The  remaining  51,220  warrants  expire  February  24,  2004.

      Information with respect to stock options and warrants outstanding to
       certain employees, directors and service providers are as follows:

<TABLE>
<CAPTION>
                                                             2003
                                                    ------------------------
                                                                     Average
                                                                    Exercise
                                                     Shares          Price
                                                    --------      ----------
<S>                                                <C>            <C>
Outstanding  at  beginning  of  year                 248,220      $   7.43

Granted  at  market  value                            50,000      $   1.86

Exercised                                                  -      $      -

Expired                                             (147,000)     $   (7.75)
                                                    --------      ---------

Outstanding  at  the  end  of  year                  151,220      $    5.28
                                                    ========      =========
</TABLE>

<TABLE>
<CAPTION>
                                     Options Outstanding                        Options Exercisable
                               ------------------------------              ------------------------------
                                 Shares            Average           Average           Shares           Average
                               Outstanding        Remaining          Exercise        Outstanding        Exercise
                                 2/28/03         Life (Years)         Price            2/28/03            Price
                               -----------       ------------        --------        -----------        --------
<S>                              <C>                  <C>             <C>                <C>            <C>
     $1.00 to $2.00     .         50,000              1.0             $  1.86             50,000        $  1.86
     $4.00 to $5.00               50,000              1.5             $  4.50             50,000        $  4.50
     $9.00 to $10.00              51,220              1.0             $  9.38             51,220        $  9.38
                                 -------                              -------            -------        -------
                                 151,220                              $  5.28            151,220        $  5.28
                                 =======                              =======            =======        =======
</TABLE>

(8)  RELATED  PARTY  TRANSACTIONS

The  Company currently operates under an agreement with ESP Communications, Inc.
(ESP),  which  is  owned  by  the  wife  of  the  Company's president. Under the
agreement,  ESP  performs  specified  administrative  duties  on  behalf  of the
Company. Either party may cancel the agreement with a thirty day written notice.
The  Company currently pays ESP $5,000 on a semi-monthly basis for its services.
The  Company recorded management services expense concerning this agreement with
ESP of approximately $120,000 and $115,000 for the years ended February 28, 2003
and  February  28,  2002,  respectively.

During  2003,  the  Company advanced $162,000 to certain shareholders to pay the
required  federal  withholding  on  dividends  to  foreign  shareholders.  These
shareholders  have  agreed  to  repay  this  advance  by withholding from future
dividend  payments.  They  have also agreed to pay interest on these advances at
the  rate  of  3.5%  per  annum.

                                      F-13
<PAGE>

(9)  EARNINGS  (LOSS)  PER  SHARE

Basic  earnings  per  share  amounts  are computed based on the weighted average
number of shares outstanding during the applicable periods. The number of shares
used  in  the  computations  were  9,484,785  in  2003  and  9,367,142  in 2002.

Diluted earnings per share was not computed as of February 28, 2003 and February
28, 2002 as taking into consideration the options and warrants outstanding would
have  been  anti-dilutive  to  earnings  per  share.

(10)  CONTINGENCIES

LPI  was  named as defendant in a suit claiming it violated the Texas Securities
Act by not complying with the registration requirements of the Act in connection
with  viatical  settlement  contracts  it  has  arranged.  On July 31, 2001, the
McLennan  County  District  Court  for the 19th Judicial District ruled that the
Company's  viatical  settlement transactions were not securities under Texas law
and  that  the  Company  is not required to register them as securities prior to
sale.  In  making  its  ruling,  the  Court awarded summary judgment against the
Plaintiff  in  this  action dismissing the case entirely. Plaintiff has appealed
this decision. LPI has not accrued any liability in connection with this suit as
of  February  28,  2003.

On  May  31,  2001, LPI was named as defendant in a suit brought by the State of
Texas.  Plaintiff  alleges that LPI failed to disclose to purchasers of viatical
settlements  prior  to  1997 that the purchasers could incur additional carrying
costs  in  the  form of premium payments if viators lived beyond their projected
life  expectancies.  Plaintiff  claims that the nondisclosure violates the Texas
Deceptive  Trade  Practices  Act  (the  "DTPA")  and seeks an injunction against
future violations, civil penalties, and restitution to the affected individuals.
The Company has met with the plaintiff to discuss resolution of this matter, but
the results of that meeting were not conclusive. Management believes that it did
not  violate  the  DTPA  and  that  the  applicable statute of limitations would
preclude  most  of  the  possible claims. The Company's primary legal counsel in
this  case  has  informed the Company that they do not anticipate the settlement
costs  in  this  case to exceed $300,000. As of February 28,2003 the Company had
accrued  $300,000  for  the  settlement  of  this  case.

LPI is aware of certain instances wherein the insurance companies denied payment
on  policies  in  which it arranged the settlement with investors. Most of these
denials  related  to suicide clauses or unforeseeable reductions in face amount.
Face  amount  of the policies in question total $796,500. During the fiscal year
ended  February  28,  2003, the Company paid $236,699 to these investors and has
accrued  another $ 279,867 for future claims that might arise on these policies.

On  September  20,  2001,  the Company received notice from the Internal Revenue
Service of a proposed tax adjustment to LPI's taxable income for the years ended
September  30,  1993,  1994  and  1995.  The  proposed  tax deficiencies totaled
$1,755,624  plus proposed penalties totaling $351,124.  LPI would also be liable
for  interest  due  on  any  portion of this assessment that is upheld.  LPI has
filed  a  tax  court  petition  in  response  to  this  proposed assessment. The
Company's legal counsel in this matter is not able to make an estimate as to the
amount  of  LPI's  liability  in  this  matter.  Management believes that it has
substantial  support  for  its  position and that the ultimate liability will be
substantially  less  than  the  proposed assessment. Because the Company has not
been  able to quantify its liability with regard to this proposed assessment, no
loss  accrual  was recorded on the financial statements as of February 28, 2003.

(11)  SUBSEQUENT  EVENTS

The  Company  has  developed a purchasing platform for the purchase of a pool of
life settlement  policies  through  the  use  of funds to be raised in an exempt

                                      F-14
<PAGE>

offering  to accredited investors. These securities will be issued in a Delaware
limited  liability  company  that is managed by a limited liability company that
the Company controls. If the minimum capital of $5,000,000 under the offering is
raised,  the  Company expects to receive fee income from its services associated
with  the  purchase of policies for the pool. In addition, if the first of these
securities offerings is successful, management anticipates forming other similar
limited  liability  companies  managed  by  the  same  company which the Company
controls and will continue to use this purchasing platform for as long as market
conditions  warrant.  The  Company  has  committed to investing $500,000 in this
limited  partnership  if the minimum subscription is obtained. Because generally
accepted  accounting  principles  require  that  investments  in  life insurance
policies  be  written down to their cash surrender value, management anticipates
that  for financial reporting purposes, a substantial portion of this investment
will  be  charged  to  expense in the year it is made.

During  April of 2003, the Company invested $1,005,000 to purchase 67,000 shares
of  Nuveen  Preferred  and Convertible  Income  Fund.



























                                      F-15